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Insurance Act
Loi sur les assurances

ONTARIO REGULATION 637/00

RECIPROCAL INSURANCE EXCHANGES

Consolidation Period: From May 5, 2008 to the e-Laws currency date.

Last amendment: O. Reg. 124/08.

This Regulation is made in English only.

0.1 (1) For the purposes of clause 380.1 (d) of the Act and subject to subsection (2), an agreement referred to in section 380.1 of the Act between subscribers to a reciprocal insurance exchange must contain the following requirements:

1. The advisory board of the exchange shall appoint an audit committee from among the members of the advisory board.

2. The advisory board of the exchange shall authorize and direct the audit committee,

i. to exercise the powers and perform the duties described in subsections 3 (5), (6), (7) and (9) of Ontario Regulation 123/08 (Corporate Governance — Part II.2 of the Act) made under the Act, and

ii. to notify the exchange’s auditor of every meeting of the committee and invite the auditor, at the exchange’s expense, to attend and be heard at the meeting. O. Reg. 124/08, s. 1.

(2) If an agreement between subscribers to a reciprocal insurance exchange was entered into before the day this section comes into force and provides for the appointment of such committees as the Superintendent may require, subsection (1) does not apply to the agreement on or before the effective date of the first amendment that is made to the agreement for any reason after the day this section comes into force. O. Reg. 124/08, s. 1.

1. The following information, documents and declarations are prescribed for the purpose of subsections 381 (1) and (2) of the Act:

1. The name of the attorney and the name or designation under which reciprocal contracts of indemnity or insurance are issued.

2. The classes of insurance to be effected or exchanged under reciprocal contracts of indemnity or insurance.

3. A copy of the agreement between the subscribers that is referred to in section 380.1 of the Act.

3.1 A copy of the form of the contract or contracts of indemnity or insurance to be effected or exchanged.

4. A copy of the form of power of attorney under which reciprocal contracts of indemnity or insurance are executed on behalf of the exchange’s members by a person other than a member.

5. The location of the office from which reciprocal contracts of indemnity or insurance are to be issued.

6. A plan of operation, in a form approved by the Superintendent, that provides information with respect to the business of the exchange.

7. Evidence satisfactory to the Superintendent that it is the practice of the exchange to require its subscribers to maintain in the hands of the attorney, as a condition of membership in the exchange, a premium deposit reasonably sufficient for the risk assumed by the exchange.

8. Evidence satisfactory to the Superintendent that the management of the affairs of the exchange is subject to the supervision of an advisory board in accordance with the terms of the agreement referred to in section 380.1 of the Act. O. Reg. 637/00, s. 1; O. Reg. 124/08, s. 2.

2. The following requirements and criteria are prescribed for the purpose of subsection 382 (1) of the Act:

1. The name or designation of the exchange must not be so similar to any other name or designation previously adopted by any exchange or by any licensed insurer as in the opinion of the Superintendent to be likely to result in confusion or deception.

2. The exchange must be financially viable, having regard to the credit worthiness of the subscribers and the number and diversity of risks to be insured through contracts of indemnity or insurance.

3. There must be a reasonable degree of similarity among the subscribers.

4. Adequate arrangements for the funding of losses must have been made.

5. It must be the practice of the exchange to require its subscribers to maintain in the hands of the attorney, as a condition of membership in the exchange, a premium deposit reasonably sufficient for the risk assumed by the exchange.

6. The management of the affairs of the exchange must be subject to the supervision of the advisory board in accordance with the terms of the agreement referred to in section 380.1 of the Act.

7. The agreement between the subscribers complies with the requirements of section 380.1 of the Act and section 0.1 of this Regulation. O. Reg. 637/00, s. 2; O. Reg. 124/08, s. 3.

3. (1) The minimum amount that must be maintained under subsection 386 (1) of the Act is the amount of cash or investments equal to 50 per cent of the net written premiums reported in the most recent statement delivered by the exchange under clause 102 (1) (a) of the Act. O. Reg. 124/08, s. 4.

(2) In determining the amount of cash and investments referred to in subsection (1), only the following shall be included:

1. If the exchange has its principal office in Ontario, the value of only investments that the exchange is authorized to make under section 387 of the Act shall be included.

2. If the exchange has its principal office in a province or territory of Canada other than Ontario, the value of only investments that the exchange is authorized to make under the laws of the jurisdiction in which the principal office is located shall be included.

3. If the exchange has its head office outside Canada, the value of only investments that the exchange is authorized to make under Part XIII of the Insurance Companies Act (Canada) shall be included. O. Reg. 124/08, s. 4.

4. The minimum surplus that must be maintained under subsection 386 (2) of the Act is $50,000. O. Reg. 637/00, s. 4.

5. Omitted (provides for coming into force of provisions of this Regulation). O. Reg. 637/00, s. 5.