Many insurers in Canada are federally license. Licensing is provided only to those companies that can meet the strict financial standards established by the Office of the Superintendent of Financial Institutions. The insurers are monitored on an ongoing basis to ensure their financial stability.

The Superintendent of Insurance in each province is responsible for administering the Insurance Act. The main areas of responsibility as they relate to insurers include:

• Supervising the terms and condition of insurance contracts.
• Licensing of Insurers, all insurers are required to be licensed in each province in which the transact business. This rule applies even when those insurers have received a federal license.
• Monitoring financial stability of provincially licensed insurers.

The most important area of government regulation, provincial or federal, involves monitoring the financial strength of insurers. When insurers are considered capable of fulfilling their financial obligations, they are considered solvent. When they are unable to meet these obligations, they are insolvent.

Premiums paid to insurers are not fully earned until the expiry of the insurance policy. Unearned premiums are considered to be held in trust to refund to the insureds in the event the policy is cancelled prior to its expiry date.

Fiduciary Responsiblity of Insurance Brokers

Commissions are not fully earned until the expiring of the insurance policy. Unearned commissions are considered to be held in trust to refund to the insured in the event the policy is cancelled prior to its expiry date.