Unlicensed insurance

Last updated: May 18, 2023

Budget 2023 amended the Insurance Premium Tax Act to:

  • Effective May 11, 2023, harmonize the offence and penalty provisions with other taxes
  • Effective January 1, 2024, make electronic filing and payments mandatory, deem when payments are considered received and allow for electronic notices of assessment

Unlicensed insurance commonly covers hard-to-place risks. If you enter into an insurance contract with an unlicensed insurer, you’re required to file and pay insurance premium tax.

The insurance premium tax on unlicensed insurance is based on the BC premium that’s paid or payable under the contract of unlicensed insurance to insure a person resident in B.C. or a property situated in B.C. at the time the premium becomes payable.

The tax applies if you’re a resident of B.C., which includes any corporation or partnership with a permanent establishment in B.C., even if your insurance was purchased by a non-resident on your behalf.

Insurance premium tax still applies to the BC premium even if the insurance wasn’t available through a licensed insurer.

However, some unlicensed insurance premiums may be exempt from insurance premium tax.

Tax rate

The tax rate is 7% of the BC premium paid or payable to an unlicensed insurer.

Unlicensed insurers

An unlicensed insurer is any insurer who isn’t authorized by the BC Financial Services Authority to carry on insurance business in B.C. Generally, unlicensed insurers are prohibited from conducting insurance business in B.C. under the BC Financial Services Authority regulations.

As a purchaser of insurance, you are responsible for identifying if your insurer is licensed or unlicensed in B.C.

Most insurance products sold in B.C. are purchased from licensed insurers. However, to find out if an insurance company is licensed, refer to the list of authorized insurers maintained by BC Financial Services Authority. If an insurer is not on this list, it is likely an unlicensed insurer.