If an Insurer Fails: What Assuris Protects, and to What Limit

This is the question a person asks once, quietly, usually after signing something that will matter in thirty years: what happens if the company is not there. The answer is published, it is more reassuring than most people expect, and it has limits that are worth knowing exactly rather than approximately.

What Assuris is, and why nobody has to join it

Assuris describes itself as an independent, industry funded, not for profit compensation association, established in 1990 to protect Canadian policyholders if their life and health insurance company fails.

Two features matter for a policyholder.

First, membership is not optional for the companies. Every life and health insurance company authorised to sell insurance in Canada is required to become a member, and cannot leave while it continues to do business here.

Second, protection is not optional for the policyholder either, in the good sense: a Canadian citizen or resident who purchased a policy from a member company is protected automatically. There is no application, no election and no fee.

The policy must have been issued in Canada by a member, and be in force at the time of the failure.

The six limits, and the sentence inside every one of them

The limits are set out in the association’s Memorandum of Operation, and every one of them is written the same way: a stated amount OR ninety per cent of the covered benefit, whichever is HIGHER.

That construction is the part people get wrong, so it is worth stating plainly. The stated amount is a FLOOR, not a ceiling. A benefit larger than the stated amount is not cut down to it; it is protected at ninety per cent of itself.

Death benefit: one million dollars, or ninety per cent.

Health expense: two hundred and fifty thousand dollars, or ninety per cent.

Monthly income, which is how a disability benefit or an annuity payment is treated: five thousand dollars a month, or ninety per cent per month.

Cash value: one hundred thousand dollars, or ninety per cent.

Accumulated value, meaning an investment account attached to a policy: one hundred thousand dollars, or ninety per cent.

A segregated fund guarantee: one hundred thousand dollars, or ninety per cent.

So a person holding a death benefit of three million is protected to two point seven million rather than to one million, because ninety per cent is the higher of the two tests. And a person holding a death benefit of four hundred thousand is protected in full, because the stated amount is the higher one.

Per person, per policy, per company

The Memorandum states that the maximum protection applies to each covered person PER POLICY, and that it applies SEPATELY to each member company.

The second half is genuinely useful. A household whose protection is spread across two member companies has the limits applied to each company independently, which is a real diversification effect and one nobody usually thinks about when the arrangement is being made.

One thing this page will not tell you, because the published material does not settle it: whether several policies with the SAME company are added together for a category limit, or treated one by one. The Memorandum’s wording points to per policy. The association operates a protection calculator that may treat it otherwise. A household whose total with one company is near a limit should ask Assuris directly, in writing, rather than rely on a general page including this one.

What actually happens, which is not a cheque

People imagine a compensation fund writing cheques. That is not the mechanism, and the real one is better.

The association’s stated approach is that transferring the business to a solvent company is the best approach, because it realises the value of the business and, in its words, ensures the continuation of policyholder benefits. A court appointed liquidator typically transfers the policies to a stable insurance company.

So in the ordinary case a policyholder does not receive a settlement. They receive a new insurer, and their coverage continues at a level that meets or exceeds the guaranteed protection.

That matters most for the person who could not buy a new contract today. A policyholder whose health has changed since they were underwritten is not sent back to the market. The contract travels.

What happens above the limit, in the Memorandum’s own words

This is the part to read slowly, because it is the part that is not reassuring.

Where the reduced level of benefits EXCEEDS the maximum protection, the association is not required to provide any protection. Where the reduced level is LESS than the maximum protection, it makes arrangements so the policy continues to provide the lesser of the original contractual benefits and the maximum protection.

In plain terms: the portion above the limit is not guaranteed, and it can be reduced. The association does not describe in detail what becomes of that excess, and this page will not speculate about it.

The coverage date is normally the date the regulator took control of the company or the date of the winding up order, so the benefits measured are the ones in force then.

It is not deposit insurance, and the difference is not cosmetic

Deposit insurance in Canada is provided by a federal Crown corporation established in 1967, and it protects deposits held at member banks and similar deposit taking institutions.

Assuris is not a Crown corporation, it is not government funded, and it protects insurance policies rather than deposits.

Different body, different products, different limits, and not interchangeable. A person who believes their policy is covered by deposit insurance is wrong, and a person who believes their savings account is covered by Assuris is wrong in the other direction.

This matters on this site for one reason in particular. A life insurance contract is sometimes described as being like a savings account, and the protection regime is one of the places where that comparison breaks. The two are protected by different institutions on different terms, and anyone explaining one by reference to the other should say so.

Has it actually happened in Canada

Yes, four times, and the association publishes what happened each time. The companies are a matter of public record and are not named here, because this site names no insurer and the names add nothing to the point.

In the first failure, in January 1992, all of the individual policyholders and the group certificate holders were fully protected.

In the second, in January 1993, ninety six per cent of roughly two hundred and forty nine thousand policyholders were one hundred per cent protected, and the remaining four per cent who incurred some loss all retained at least ninety per cent of their benefits.

In the third, in August 1994, there was full recovery for two hundred and sixty thousand individual policyholders and another one and a half million people in group plans.

In the fourth, in February 2012, ninety nine per cent of twenty two thousand policies were fully covered, and the remaining one per cent retained at least ninety five per cent of their benefits.

Read that record honestly. It is a good record, and it is not a promise. Four cases is a small sample, the largest of them is thirty years old, and the limits that applied then are not the limits that apply now.

Where to read this at the source

The description of the association, the automatic protection of Canadian citizens and residents, the compulsory membership, the six limits with the ninety per cent construction, the per person per policy per member wording, the transfer approach, the treatment of benefits above the limit and the four past failures are published by Assuris, on its own pages and in its Memorandum of Operation, amended and restated in May 2023. The deposit insurance comparison is on the deposit insurer’s own page about consumer protection partners.

Read on 30 September 2026, free to consult. The limits were increased in 2023 and apply automatically to policies already in force as well as new ones. One question is left open above and it is left open deliberately: whether several policies with one company are aggregated for a category limit. Ask Assuris.

Frequently Asked Questions

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What deposit insurance does and does not cover is set out in what deposit insurance covers and what deposit insurance does not cover. The window in which an insurer can still question a contract is in the contestability period.