Published | Category: GST and QST

Insurance Claims Administration Services

An insurer may enter into an agreement with a person to have that person provide the insurer with a claims administration service relating to insurance policies the insurer issues. The insurer pays the person a fee for the service. As a rule, such a service provided to an insurer is a taxable supply.

Example

An insurer enters into an agreement with a company to have that company provide the insurer with a claims administration service relating to certain travel insurance policies the insurer supplies. The insurer pays the company a fee for the service.

As part of the service provided, the company:

  • receives claim information from a claimant;
  • confirms that the claimant was insured under the insurance policy when the expenses were incurred;
  • checks that the expenses for which the claim is made are in accordance with the terms and conditions of the insurance policy;
  • processes the insurer's payment in respect of the claim;
  • obtains approval from the insurer prior to processing a claim if more than an agreed amount is claimed; and
  • provides regular standard reports to the insurer regarding its service and the claims that it processes. 

In this example, the company is making a taxable supply of an administrative service to the insurer. The service is not considered to be a financial service. If the company is a GST and QST registrant, it will generally be required to collect GST and QST on the payment received from the insurer.

For more information about financial services, refer to GST/HST Technical Information Bulletin B-105, Changes to the Definition of Financial Service.

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