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New Alta. captive insurance legislation could benefit farmers

New Alta. captive insurance legislation could benefit farmers

Captive insurance allows businesses to set up in-house insurance solutions

By Diego Flammini
Staff Writer

A new Alberta bill could change how some businesses access insurance coverage.

Finance Minister Travis Toews introduced Bill 76, the Captive Insurance Companies Act on Wednesday.

“Captive insurance is an in-house insurance solution for companies,” Toews said during a press conference about the bill. “A captive insurance company is a company created and owned by a parent corporation or association and provides insurance to the parent or members of the association.”

If passed, Alberta would be the second Canadian province, behind B.C., who passed its captive insurance law in 1988, to allow the practice. In total, captive insurance is available in about 70 jurisdictions worldwide.

In B.C., the college of veterinarians offers its members insurance through the B.C. Veterinary Captive Insurance Company.

The insurance company provides individual coverage of up to $2 million per claim and $2 million per policy period.

Captive insurance companies are designed to help companies in sectors where flexibility is needed.

In agriculture, for example, producers could use captive insurance to ensure they’re not bound by traditional insurance policies.

“You’re able to cover the exact risk you’re looking for. For crop insurance, farmers can get a little more coverage or cover a crop that may not be covered somewhere else,” David Buss told

Buss is an agent with Nesbit Agencies in Minnesota. Along with Unity Financial, the companies formed AgriCap Group, which has helped farmers develop their own risk management solutions since 2018.

Organizations are likely to set up captive insurance companies for one of two reasons, he said.

“One is involuntary. There’s nowhere to get coverage so (companies) set up their own captive so they have coverage. The other is voluntary, where your risk is better than anyone else’s.”

With traditional insurance, a client pays the insurance company, and the insurance company collects the profits.

But with a captive insurance company, the parent company owns the insurance company and collects the profits, which it can invest in other parts of the business.

“If you own your own insurance company and you don’t have any losses, those profits go to your bottom line instead of an insurance company’s bottom line,” Buss said.

Captive insurance companies in Alberta will be subject to regulatory oversight.

The provincial government expects to release those rules in 2022.

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