January 24, 2004 – Hi all potential clubs, in my previous email about the new club member fee, I mentioned that a certain alternative insurance program was not valid in Canada.

We have been told that McKay Insurance Agency and Clarendon American Insurance Company (the American insurance broker and the American insurance company which provides the IMBA insurance) state that IMBA insurance is valid in Canada. That statement is made on McKay website.

Our insurance company has told us otherwise:

“Clarendon American Insurance Company is not licensed by the Office of the Superintendent of Financial Institutions nor any Provincial regulatory counterparts. They may be acting illegally and contrary to Federal Canada Bill C-80. Federal and Provincial regulators require that insurance companies deposit assets to be held in trust in order to guarantee payment of future claims activity. Without these assets organizations and individuals are at serious risk of being left without defence and collectible insurance for court awarded judgements. Nonadmitted (unlicensed) insurance is permitted in special situations where insurance is inaccessible in the domestic marketplace. In those special situations a 25% Federal Excise Tax is added to the total premium. However, given that liability insurance is accessible within the domestic market place this point is made more for education than its true relevance.”

“In addition to the unlicensed insurer, the McKay Insurance Agency is not licensed in any Provincial jurisdiction, therefore, may also be acting illegally and contrary to Federal Canada Bill C-80. If an uninsured claim resulted from errors or omissions on part of this agency your organization including Clubs would have little recourse in Canada. A lawsuit would have to be brought against this agency in the State of Iowa, which would carry significant additional cost disadvantages. I would also suggest that there might not be collectible insurance from the agencies Error's & Omissions Insurance Company due to the potential illegality of transacting business in a jurisdiction without a license.”

The OCA highly recommends that if your club is considering alternative insurance, and that you investigate all the facts before committing.

Jeremey Ludwig

Development Coordinator Ontario Cycling Association