Licensed Insurance

Most insurance products sold in B.C. are purchased from licensed insurers. When insurance is purchased from a licensed insurer, the licensed insurer must file and pay the insurance premium tax.

Licensed insurers pay insurance premium tax on premiums that were received or became receivable in the calendar year, less:

  • exempt premiums
  • taxable premiums returned to policyholders, and
  • the value of dividends paid or credited to policyholders.

Tax Rates

The tax rate for premiums is based on the class of insurance as outlined below.

Contract Type Class of Insurance Tax Rates(s)
Life and Health
(includes loss of
 salary or wages)
Accident and Sickness
Life
2%
Property and Automobile Automobile
Boiler and Machinery
Fidelity
Home Warranty
Marine (unless exempt)
Product Warranty
Property
Title
Vehicle Warranty
4.4%
Other Aircraft
Credit
Credit Protection
Hail
Legal Expenses
Liability
Mortgage
Surety
4%

Other approved insurance products may be reported under life and health, property and automobile, or other, depending on the risks covered by the policy.

Property Insurance

Property insurance is defined in the Classes of Insurance Regulation of the Financial Institutions Act and of the Insurance Premium Tax Act. The act defines property insurance as insurance against the loss of or damage to property but does not include aircraft, automobile and hail insurance. Property includes both tangible and intangible property. Insurance premiums that only cover pure economic loss are not considered property insurance.

If a single premium (indivisible premium) is paid for a multi-peril policy with property exposure, the class of insurance is considered to be property insurance. Accident and sickness, aircraft, automobile, hail, or life insurance with property exposure is not considered property insurance.

Licensed Insurers

A licensed insurer is:

  • an insurer who has business authorization under the Financial Institutions Act (FIA) to carry on insurance business in the province
  • companies that are registered under the Insurance (Captive Company) Act
  • persons who are members of a reciprocal exchange that hold a valid permit under the FIA
  • Insurance Corporation of British Columbia (ICBC)

Insurance companies and insurance business in B.C. are regulated by the Financial Institutions Commission (FICOM). A business authorization is required from FICOM to carry on a licensed insurance business in B.C.