O. Reg. 637/00: RECIPROCAL INSURANCE EXCHANGES

 

ONTARIO regulation 637/00

made under the

insurance act

Made: December 6, 2000
Filed: December 13, 2000

RECIPROCAL INSURANCE EXCHANGES

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 form of the contract, agreement or policy under or by which reciprocal contracts of indemnity or insurance are to be effected or exchanged.

4. A copy of the form of power of attorney under which reciprocal contracts of indemnity or insurance are to be effected or exchanged.

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 or committee of the subscribers in accordance with the terms of the power of attorney.

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 an advisory board or committee of the subscribers in accordance with the terms of the power of attorney.

3. The minimum amount that must be maintained under subsection 386 (1) of the Act is the amount 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.

4. The minimum surplus that must be maintained under subsection 386 (2) of the Act is $50,000.

5. (1) Section 1 comes into force on the day that subsection 4 (46) of Schedule I to the Red Tape Reduction Act, 1999 comes into force.

(2) Section 2 comes into force on the day that subsection 4 (47) of Schedule I to the Red Tape Reduction Act, 1999 comes into force.

(3) Sections 3 and 4 come into force on the day that subsection 4 (51) of Schedule I to the Red Tape Reduction Act, 1999 comes into force.