In 2013, BCFIRB reviewed a proposal from the poultry industry to create a producer-owned insurance company. Although privately-owned, the program would have been mandatory and funded by producers under the poultry boards and commissions’ regulatory authority. The review examined whether boards had the legal authority under the Natural Products Marketing Act (BC) (NPMA) to support the proposal, and whether it aligned with sound marketing policy.
What was decided
On August 14, 2014, BCFIRB directed regulated marketing boards and commissions not to use their regulatory authority to support or fund the proposed insurance company.
BCFIRB Supervisory Decision — Poultry Insurance — August 14, 2014 (PDF, 265KB)
Why the proposal was rejected
BCFIRB concluded that:
- There is no clear legal authority under the Natural Products Marketing (B.C.) Act (NPMA) for boards and commissions to require producers to participate in an industry-run insurance program
- Using producer levies to fund and operate a private insurance company does not align with sound marketing policy
- Proceeding without clear authority poses a significant legal risk
Why BCFIRB conducted this review
In 2013, the poultry industry formally proposed creating a producer-owned insurance company to cover losses from disease outbreaks. The company would be privately held by producers, with ownership tied to financial contributions such as shares funded through industry resources.
While led by the industry, the proposal relied heavily on poultry boards and commissions using their regulatory powers under the NPMA to:
- Require mandatory participation: All licensed poultry producers in B.C. would be required to join, with no opt-out
- Use board-managed funds: Contingency reserves would help capitalize the company and be used to issue producer shares
- Collect levies from producers: Annual insurance premiums would be collected using the boards’ authority, similar to existing levy systems
BCFIRB saw the value of insurance in managing disease risk, especially following the 2004 avian influenza outbreak. However, it raised concerns about using public regulatory tools to support a private, producer-owned venture.
This concern was not new. As early as 2006, BCFIRB advised that while poultry boards and commissions had the authority to implement mandatory biosecurity standards, any expansion into financial risk management (such as insurance) could require new legislative or regulatory authority. Similar warnings were reiterated in 2011 and again in 2013 as the insurance proposal developed.
Questions that triggered the review
BCFIRB identified two main questions:
- Did boards have the legal right to require participation in a private insurance company?
- Did the proposal meet standards for sound and orderly marketing in the public interest?
BCFIRB cautioned that proceeding without clear authority could lead to legal challenges and undermine confidence in the regulated marketing system.
On June 19, 2013, BCFIRB launched a supervisory review to assess whether the proposal was lawful, accountable and aligned with the public interest.
Background and industry context
2004/2005 avian influenza outbreak
In 2004 and 2005, a major outbreak of avian influenza devastated B.C.’s poultry industry, causing an estimated $381 million in losses. The outbreak disrupted production and raised urgent questions about disease preparedness and recovery.
Industry response and risk management measures
In response, the poultry sector partnered with government to implement new tools, including:
- Mandatory biosecurity standards
- Emergency contingency funds managed by boards
- Sector-wide recovery plans
- A coordinated Risk Mitigation Steering Committee
By 2009, the committee’s Strategic Plan for Risk Mitigation of Avian Influenza in B.C. Poultry (PDF, 1976KB) identified industry-led insurance as a crucial next step. The plan recommended shared risk tools, like insurance, to:
- Support faster recovery after outbreaks
- Offset production losses and business interruption
- Cover cleanup and biosecurity costs
Development of the insurance proposal (2011 to 2013)
From 2011 to 2013, the poultry industry developed the concept of a producer-owned, board-supported insurance company.
Timeline of the review process
BCFIRB conducted a supervisory review of the poultry insurance proposal from 2013 to 2014. This review followed a formal process that involved written submissions, public comments, and a thorough evaluation by BCFIRB.
Inquiries raised about insurance program scope
February 2011 – The Poultry Risk Mitigation Committee asked BCFIRB whether boards could:
- Require producer participation in the insurance program
- Use contingency funds to provide shareholder equity
BCFIRB responded that:
- Compensation was not a traditional board function under the NPMA
- Boards would need clear legal authority and alignment with sound marketing policy
Proposal to use historical quota-sale funds
March 2013 – The B.C. Broiler Hatching Egg Commission (BCBHEC) asked to use historical quota-sale funds to help capitalize the proposed insurance company. These funds were part of a “Restricted Fund” from earlier quota transfers to Ontario and were proposed as shareholder equity contributions.
Request denied due to legal and policy concerns
May 2013 – BCFIRB declined the request, citing unresolved legal and policy issues. The board also expressed concern over using regulated funds for private financial ventures without clear statutory authority.
Supervisory review formally launched
June 2013 – These ongoing concerns prompted BCFIRB to launch a formal supervisory review.
Supervisory review process
The supervisory review focused on determining whether the insurance program was legally permissible and aligned with sound marketing policy. The review was conducted with guidance from BCFIRB’s SAFETI principles, ensuring that decisions were strategic, fair, and transparent.
Review launched with request for joint proposal
June 19, 2013 – BCFIRB launched Phase 1 of the review and directed the poultry boards and commissions to submit a joint proposal. The proposal was expected to address key legal and policy questions, including the alignment with NPMA:
- Is poultry disease insurance sound marketing policy?
- Is mandatory poultry disease insurance sound marketing policy?
- If mandatory insurance is deemed sound, is a producer association-owned captive insurance company also sound marketing policy?
Joint proposal submitted by poultry boards and commissions
January 2014 – Poultry boards and commissions submitted a joint proposal, including legal opinions, outlining their rationale and proposed structure for the insurance program.
Public feedback invited on proposal
February to March 2014 – BCFIRB invited public comments on the joint submission and received responses from producers, processors and other stakeholders.
Additional legal and policy clarification submitted
June 2014 – Poultry boards and commissions submitted additional legal and policy responses to clarify their position.
Final supervisory decision issued by BCFIRB
August 14, 2014 – BCFIRB issued its final supervisory decision. It concluded that the proposed program lacked clear legal authority and did not align with sound marketing policy. Boards and commissions were directed not to proceed.
Documents related to the review
These documents trace the evolution of the poultry insurance proposal, from early risk mitigation planning through to BCFIRB’s supervisory decision and follow-up.