Regulatory framework in Québec

The P&C insurance industry is heavily regulated in Québec, which creates significant compliance costs for companies. For IBC, the key lies in having a modern and balanced regulatory framework.  Not only must it ensure consumers are protected, it must also allow insurers to innovate and develop products to meet the constantly evolving needs of their clients. 

Taxes too high on insurance products

The many taxes applied on P&C insurance products directly impact the cost of insurance for consumers. In addition to the 9% sales tax, Québec policyholders indirectly pay a 3.48% tax on premiums. Ultimately, policyholders pay $112.79 on a $1,000 premium. 

When one considers that insurance is there to enable consumers to protect their assets and companies to do business, IBC believes taxes are too high and, for several years now, it has asked that they be reduced or abolished. 

Regulatory framework for P&C insurers: cumbersome and costly

Insurers doing business in Québec must comply with more than 20 guidelines and laws (Act respecting insurance, Automobile Insurance Act, Act respecting the distribution of financial products and services, etc.) that regulate the financial sector. 

This requirement and the underlying bureaucracy result in significant operating expenses for companies that must allocate more and more resources to carry out oversight and control activities in order to comply.

In addition, there are capital requirements whereby insurers must maintain reserves to meet their obligations and guarantee their solvency. 

The insurance industry believes that the current rigid framework as well as the inherent costs and constraints need to be reviewed to give it the latitude and flexibility to innovate. It is also essential that all of the regulations, both federal and provincial, be harmonized and integrated into a more coherent whole.


In 2017, the P&C insurance industry paid more than $1.8 billion in the form of taxes to the government of Québec, an increase of 44.3% in just five years, from 2013 to 2017. 

Insurance products are heavily taxed. Here are the different taxes levied:  

  • 3% tax on premium on all insurance products
  • 18% temporary surtax until March 2022 on all insurance products
  • 30% temporary surtax until March 2024 on all insurance products
  • 9% sales tax on all insurance products

In 2017, consumers paid a total of $848 in sales tax on insurance products. Add to this a further $362 million in sales tax on the products and services that the industry purchases when it settles claims to compensate policyholders.  

IBC believes that Quebec policyholders should not have to pay that much to insure their property and activities. This is why they are calling for the elimination of the temporary surtaxes levied since 2012.

Innovate and invest in new technologies

The insurance industry operates in a market that extends well beyond the borders of Québec and Canada. It must remain on top of the new realities which impact insurance and force current market players to review their products and practices.

In a rapidly and constantly changing environment, insurers must innovate and make the necessary investments to meet the needs and expectations of consumers, and remain competitive. It is therefore essential that the framework in which they operate favour such innovation.

All are cognisant of the need for a framework that protects consumers, but insurers must also be able to take advantage of conditions that promote their growth and competitiveness. A healthy P&C insurance industry is one of the factors that facilitate access, via consumers, to cost effective insurance offer.