Vol. 147, No. 4 — February 13, 2013

Registration

SOR/2013-11 January 31, 2013

CANADA TRAVELLING EXHIBITIONS INDEMNIFICATION ACT

Regulations Amending the Canada Travelling Exhibitions Indemnification Regulations

P.C. 2013-20 January 31, 2013

His Excellency the Governor General in Council, on the recommendation of the Minister of Canadian Heritage, pursuant to paragraph 5(c) of the Canada Travelling Exhibitions Indemnification Act (see footnote a), makes the annexed Regulations Amending the Canada Travelling Exhibitions Indemnification Regulations.

REGULATIONS AMENDING THE CANADA TRAVELLING EXHIBITIONS INDEMNIFICATION REGULATIONS

AMENDMENT

1. Section 7 of the Canada Travelling Exhibitions Indemnification Regulations (see footnote 1) is amended by striking out “and” at the end of paragraph (f), by adding “and” at the end of paragraph (g) and by adding the following after paragraph (g):

  • (h) $700,000, if the total fair market value is from $450,000,001 to $600,000,000.

COMING INTO FORCE

2. These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues and objectives

The objective of the Canada Travelling Exhibitions Indemnification Act (the Act) is to increase access by Canadians to heritage. This includes heritage presented in domestic exhibitions developed by Canadian museums that circulate within Canada and in international exhibitions that are being brought into the country to be shown at Canadian venues. For exhibitions with very high values, commercial insurance costs can often be so high as to represent a significant obstacle to institutions seeking to host them.

The Act authorizes the Minister of Canadian Heritage to enter into indemnification agreements with owners in relation to the contents of travelling exhibitions. This enables the Crown to assume the risk of contingent liability associated with these exhibitions and, in doing so, lower insurance costs to institutions and ensure that Canadians will continue to have access to important heritage content. To date, there have been no claims for indemnification by owners of exhibited objects since the Act was passed in 1999.

Since the Act came into force, exhibition values have increased, and the Act’s effectiveness had been undermined by the limits it imposed on

  • the overall maximum liability that could be assumed by the Crown ($1.5 billion);
  • the basis on which that maximum could be calculated (the total was applied to a single year); and
  • the maximum liability that could be assumed for an individual exhibition ($450 million).

As a result of these limits, over the last three years, the Minister of Canadian Heritage has had to refuse indemnity, or agree to only partial indemnity, for a number of eligible exhibitions.

In order to address that situation and maintain the effectiveness of the Canada Travelling Exhibitions Indemnification Act, Budget 2012 announced the Government’s intention to modernize it through three legislative amendments. All three amendments were contained in the Jobs, Growth and Long-term Prosperity Act, which received Royal Assent on June 29, 2012.

Canada’s museums and the Canadian Museums Association welcomed the Government’s announcement concerning strengthening of the Act. In a news release issued by the Canadian Museums Association on March 29, the executive director declared, “This is a remarkable increase in support that will allow Canadians to see valuable collections that they would normally not be able to view.”

One of the three amendments increased the limit on the amount of liability the Crown may assume for a single exhibition, allowing the Crown to now indemnify exhibitions with a value of between $450 million and $600 million.

As a result of that amendment to the Act, amendments to the Canada Travelling Exhibitions Indemnification Regulations (the Regulations) are necessary to maintain an indemnification scheme that is transparent, can be applied consistently among all eligible exhibitions, and minimizes the Crown’s exposure to risk.

The Regulations specify deductibles that apply in the case of damage or loss to the contents of an indemnified exhibitionin a scale that relates the amount of deductible to the total value of an individual exhibition. For example, exhibitions valued at between $200 million and $300 million are subject to a deductible of $300,000.

With the increase to liability that the Crown may now assume in relation to exhibitions with a value of between $450 million and $600 million, amendments to the Regulations are needed to specify the amount of the deductible that will apply in the newly added category of exhibitions valued at more than $450 million.

Description

The regulatory amendment specifies that for indemnified exhibitions valued at between $450,000,001 and $600 million, the deductible that will apply in the event of loss or damage to the contents of the exhibition will be $700,000. The hosting institution is responsible for covering the deductible. Typically (i.e. this is not a requirement of the Act or the Regulations), institutions cover the deductible within their existing institutional insurance, or through purchase of additional insurance.

Consultation

Canadian institutions most likely to be impacted by the amendment were identified based on the indemnification program’s data about exhibition history and known plans. All such institutions were contacted and provided with information and rationale for the amendment, and specifically the amount of the new deductible. All institutions were already familiar with the principle of the deductible found in the Regulations, and none had voiced concerns about it in the past. Each indicated that the $700,000 deductible that will apply to exhibitions valued at more than $450 million was not an issue for them, and no negative impact was envisaged to their institutions.

“One-for-One” Rule

The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business.

Small business lens

The small business lens does not apply to this proposal, as there are no costs on small business.

Rationale

The setting of the new deductible amount at $700,000 is consistent with the existing scale of deductibles in the Regulations. Those deductibles, which remain unchanged, range from $30,000 for exhibitions valued at between $500,000 and $3 million, to $500,000 for exhibitions valued at between $300 million and $450 million. The scale of deductibles, including the new amount added by the regulatory amendment, is based on analysis of claims data from the insurance program that preceded the introduction of indemnification, and is aimed at capturing the most likely claims within the deductible, rather than the Crown’s liability.

The impact of the amendment will apply only to those institutions hosting the small percentage of exhibitions (possibly two or three a year) valued at between $450 million and $600 million, and the cost of ensuring the amount of the deductible will be far outweighed by the savings in insurance costs that will result from indemnification of the exhibitions in question.

Contact

Janick Aquilina
Manager
Canada Travelling Exhibitions Indemnification Program
Department of Canadian Heritage
25 Eddy Street, Suite 9-61
Gatineau, Quebec
K1A 0M5
Telephone: 819-997-8357