Any insurer not licensed under the Insurance Act is referred to as an “unlicensed insurer”. Ontario Regulation 991, Section 10, outlines the requirements for a broker placing coverage with an unlicensed insurer.

The consumer must be informed at all times that there are several risks associated with entering into a contract with an unlicensed insurer. The orderly payment of claims may be more difficult and the Superintendent has no authority over this insurer.

In order for the broker to protect both themselves and the consumer, written consent must be obtained from the consumer for whom they are acting. The broker must also ensure that sufficient insurance cannot be placed for a reasonable premium with a licensed insurer. It is worth the effort to conduct extensive research into the licensed companies prior to initiating a contract with an unlicensed insurer when compared to the potential problems involved if an unlicensed insurer is unable to meet its commitments. Brokers placing business through wholesalers are also obligated to ask if the business is being placed with licensed insurers.

RIBO requires brokers to complete an Unlicensed Insurance Client Consent and Acknowledgement of Risk Form when advising consumers on placing coverage with an unlicensed insurer.