On October 17, 2026, the Department of Finance released draft regulations specific to insurance companies, fraternal benefit societies and insurance holding companies relating to their non-financial activities, which are relevant to insurtechs.

The government introduced changes to the Insurance Companies Act in 2018 that would expand the technology activities insurers can carry on and the businesses they can invest in. Once finalized, the draft regulations will finally provide the framework that the government needs to bring the legislative changes into force.

For insurtechs, this could mean more capital and more partnership opportunities from Canadian insurers. Comments on the draft regulations are due by November 16, 2026.

Why this matters to insurtechs

Federally regulated insurers have generally been able to control, or hold a substantial investment in, only businesses whose activities are limited to those the insurer itself may carry on. An insurtech with even a minor non-insurance business line could be off-limits, and many technology activities carried on in Canada require ministerial approval.

The long-awaited amendments to the Insurance Companies Act aim to help insurers keep pace with technology and more agile competitors. However, the reforms are not a general licence for insurers to enter unrelated businesses. Insurers are subject to revenue and capital limits and existing investment prohibitions, including the separation of insurance and banking.

What changes

  • Investment in mostly-financial businesses:

    Insurers could acquire control of, or a substantial investment in, a business that derives at least 60% of its business from the financial-services activities specified for insurers (measured by the highest of revenue, operating expenses or assets), even if the rest is non-financial. This may open the door to investments in digital distribution, claims, underwriting and other insurtech businesses.

  • No upfront ministerial approval:

    Prior approval would generally no longer be required for these new activities and investments.

  • Wider referrals:

    Insurers could refer customers to "any person," not just financial service providers, which is useful for embedded insurance and distribution partnerships.

Insurance-specific wrinkles

  • Smaller revenue base:

    Insurers measure their non-financial revenue cap (15%, or 10% for those with equity of $12 billion or more) against revenue reduced by reinsurance premiums ceded, with no credit for ceding commissions. Insurers that cede heavily will have less room for non-financial revenue and may wish to model the single-year and three-year averaging options.

  • In-house tech counts:

    An exemption for certain integral information-processing activities applies to insurance groups only where a subsidiary that is a bank carries them on, so insurers' own technology platforms may use up part of their limits once the proposed two-year transition period ends.

  • Foreign insurers:

    Canadian subsidiaries of foreign groups would appear to apply the limits on a stand-alone basis, and the treatment of Canadian branches of foreign insurers is not expressly addressed.

What insurtechs should do now

  • Know your 60%:

    Track how your revenue, expenses and assets split between financial and non-financial activities. Even if you remain above the 60% financial-services threshold, an investee’s status can be affected by the insurer's own position: if the insurer breaches its revenue or capital limits, all of its investments in businesses that carry on non-financial activities, including mostly financial businesses, would be deemed temporary investments.

  • Expect monitoring rights:

    Insurer investors are likely to ask for covenants and information rights to confirm your status, and capital headroom will matter because the 10% capital limit applies at all times.

  • Position for partnerships:

    Because insurers' in-house technology and investments may count toward their limits (although only the non-financial portion of a mostly financial investee's revenue counts), a commercial partnership, such as using an insurtech’s platform or services, may be an attractive alternative to building in-house.

The regulations are still in draft and may change. Gowling WLG can help you assess how the new framework affects your capital raising, distribution arrangements or partnerships with insurers. For assistance, please contact the authors or a member of our Financial Services Regulation group.