Evidence of meeting #55 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was company.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Jeremy Rudin  Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance
Normand Lafrenière  President, Canadian Association of Mutual Insurance Companies
Karen Gavan  President and Chief Executive Officer, Economical Insurance Group
Dan Lister  President and Chief Executive Officer, Kings Mutual Insurance Company
James Wu  Chief, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance

4:05 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

And a clear question—sorry, I was just getting into constitutional politics.

Monsieur Lafrenière from CAMIC has laid out some conditions, as well.

Mr. Rudin, have you had an opportunity at Finance to consider some of these recommendations for any proposed regulation in terms of them being appropriate, enforceable, and realistic?

4:05 p.m.

Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance

Jeremy Rudin

Yes, indeed. We've looked at the variety of submissions that have been made. We're reviewing those submissions and preparing our recommendations.

4:05 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

So, it's not that Mr. Lister or CAMIC are saying absolutely no to demutualization. There have to be rules around that, or a framework, from their perspective.

Mr. Lister, approximately how much money has Kings Mutual given to the communities in your area served over the last, let's say, three, four, or five years?

4:05 p.m.

President and Chief Executive Officer, Kings Mutual Insurance Company

Dan Lister

Over the last 10, about $1.5 million.

4:05 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

Let me see, I have some information here. As a percentage basis of policies, you represent 0.7% market share in Nova Scotia. Economical Insurance represents 5%. How much, Ms. Gavan, has Economical Insurance given to Nova Scotian communities over the last five years?

4:05 p.m.

President and Chief Executive Officer, Economical Insurance Group

Karen Gavan

I only know that our total company charitable giving is approximately a million dollars, but that is spread out from coast to coast.

4:05 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

There is a difference. One of the benefits of the mutual approach, particularly a community-based, almost co-operative-type model in a mutual system, is an absolute commitment to investing in the community. If you look at the board of Kings Mutual and the boards of a lot of other smaller mutuals, they reflect the local community. They're not just business leaders. They're agricultural leaders. They're people who are committed to the community.

In terms of prudential strength, Mr. Lafrenière, you were saying that your mutual companies are very strong prudentially?

4:05 p.m.

President, Canadian Association of Mutual Insurance Companies

Normand Lafrenière

Yes. In the regions in which they operate, it's not rare to see that they have the majority of the market.

4:05 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

In many cases, perhaps they are at least as prudentially strong as regular insurance P and C companies?

4:05 p.m.

President, Canadian Association of Mutual Insurance Companies

Normand Lafrenière

Absolutely. It's not rare to see stock companies having a surplus of about 25¢ per dollar of premium when you look at mutuals. Because they do not have access to capital, they have to be more prudent in the way they operate, and so they keep in surplus. It's not rare to have 50¢ to $2.00 per dollar of premium.

4:05 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

Mr. Lister, are your rates competitive in terms of what you charge your members for insurance?

4:05 p.m.

President and Chief Executive Officer, Kings Mutual Insurance Company

Dan Lister

Most of the time, yes. We're competing against everyone in the marketplace, and we are still continuing to move along and grow. I would suggest our company has a majority of the agricultural business in the province.

4:05 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

You're able to provide policies at competitive rates, invest significantly in the communities you serve, and you're prudentially strong?

4:05 p.m.

President and Chief Executive Officer, Kings Mutual Insurance Company

Dan Lister

Yes. I think in terms of the MCT ratio, which is a ratio the government uses to ensure we are strong, their minimum requirement is 150%. Ours would be somewhere in the order of 900% to 1,000%.

4:10 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

I think I'm the only member of the committee who was a member in the late nineties when the issue of bank mergers was before committee, and at that time, the argument made—and I agreed with some of the arguments that the idea of needing to build scale to be competitive and also further to that need to deregulate to be competitive....

I'm just making the point that sometimes—

4:10 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you.

4:10 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

—the status quo is not necessarily a bad thing in terms of the way things have worked out, post-financial crisis, in terms of strong regulatory frameworks in Canada.

4:10 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you for that statement, Mr. Brison.

We'll go to Mr. Van Kesteren, please.

May 1st, 2012 / 4:10 p.m.

Conservative

Dave Van Kesteren Conservative Chatham-Kent—Essex, ON

Thank you all for appearing before us this afternoon.

I'm a participant in a mutual. My son-in-law is an agent, so obviously he's going to get my business. We have two in my riding. We have Howard Mutual, and Kent & Essex with long histories as well. I'm sure, Mr. Lister, you're familiar with those two organizations.

I must say that the correspondence I've received from the organizations themselves are very much in favour of what you're saying.

I don't know if I buy Mr. Brison's arguments completely, although I think he's right.

4:10 p.m.

Voices

Oh, oh!

4:10 p.m.

Conservative

Dave Van Kesteren Conservative Chatham-Kent—Essex, ON

The mutuals have participated well in communities, and I can cite some of the good things they've done. I think it's fair to say insurance companies are large—they're big corporate citizens. When we talk about the agents, they all seem to have that. I don't know if that's the only argument.

A sticking point is—and Mrs. Glover was giving an opportunity to both sides and I don't think she had the opportunity to hear the other side and so I'm going to give—why don't we go to Mr. Lister, because you represent....

She was asking about on the one hand, then, Ms. Gavan gave her opinion as a larger mutual, and you never had the opportunity. Did you want to pick up where she left off?

4:10 p.m.

President and Chief Executive Officer, Kings Mutual Insurance Company

Dan Lister

With regard to the distribution of the ownership or....?

4:10 p.m.

Conservative

Dave Van Kesteren Conservative Chatham-Kent—Essex, ON

Mrs. Glover, what was your line of questioning on that?

4:10 p.m.

Conservative

The Chair Conservative James Rajotte

It's your time, so....

4:10 p.m.

Conservative

Shelly Glover Conservative Saint Boniface, MB

I was simply trying to get the two sides to argue it between them in our presence as to what the pros and cons are, and I think both of them had an opportunity, but if you'd like to continue—