Proposed legislation introduced in the Alberta legislature Wednesday would allow corporations to own and operate their own insurance subsidiaries to cover industries where coverage is expensive and hard to obtain.
Bill 76, the Captive Insurance Companies Act, would introduce an option that is currently available in around 70 jurisdictions worldwide.
"With limited availability in the insurance market, it's very difficult for some companies to find adequate insurance at reasonable prices," said Finance Minister Travis Toews.
"This is especially true for many of Alberta's energy companies, as global insurance capacity is on the decline. This is impacting their ability to create jobs and invest in projects across the province."
Toews said allowing captive insurance could also allow companies to set up in Alberta to offer coverage in and outside the province.
He said Alberta's superintendent of insurance would regulate captive insurance companies, ensuring they have enough reserve capital to cover claims. Many of the rules would be set up through regulations by next year.
In British Columbia, the college of veterinarians offers coverage for its members through a subsidiary called the B.C. Veterinary Captive Insurance Company, Toews said.
Industry associations, construction companies, and utilities may also pursue this option.
The Motor Dealers Association of Alberta (MDAA) is interested in the potential of captive insurance for its members.
Gerald Wood, president of the MDAA, said dealers are having a difficult time finding affordable insurance for hail damage on their vehicles.
"Hail damage insurance is very difficult to get, it's incredibly expensive and it's putting a lot of our members in a position where they have to decide whether they self-insure," he said.
If passed, Bill 76 could allow a group of dealerships to get together and set up an insurance product to deal with those issues, Wood said.
He said the MDAA and its members want to look at the regulations to see if captive insurance will work for them.
NDP finance critic Shannon Phillips said the bill doesn't help individuals or small businesses with rising insurance costs. She also expressed skepticism over Toews's claim that school boards could use this new law because they lack the capital to set up their own insurance subsidies.
Phillips is suspicious that the regulations setting criteria and rules for companies to follow will get passed by cabinet behind closed doors.
"The details are going to matter," she said. "And the fact the UCP cabinet is asking Albertans to trust them on risk management when they have shown over and over again that they are fundamentally unable to manage risk."