We have recently reviewed redacted correspondence from the BCFSA (BC Financial Services Authority, formerly FICOM), the regulator of the Insurance Act, to a registered charity in British Columbia that advises that:
- accepting life insurance policies as donations is trafficking in insurance in contravention of section 152 of the Insurance Act (which is an offence); and
- the charity in question cannot solicit gifts of life insurance policies or accept any life insurance policies as donations from BC residents.
The letter goes on to direct that information be added to the charity’s website regarding the inability of BC residents to donate life insurance policies.
Certainly this is a matter of grave concern for charities and advisors, as gifts of life insurance policies are routinely considered in gift and estate planning discussions. We are aware that a number of organizations are reviewing the matter and considering submissions to the BCFSA on the issue. However, at the present time, charities should be aware of and consider the BCFSA’s position. At this time, we recommend charities in British Columbia remove information regarding donations of life insurance policies from their websites and suspend any discussions with potential donors of life insurance policies until more information is forthcoming.