Finance Committee on May 6th, 2014

[Scott Brison, Liberal, Kings—Hants, NS]

We did a meeting with witnesses, and you're saying you're not familiar with what happened at that meeting. Well, we'll provide it.

[Jeremy Rudin]

I'm not going to say up and down I wasn't there. I'm just not sure whether I was present at that meeting or not. I know I was a witness at a committee meeting about the mutual industry, but was it a Senate committee or a House committee? That, I'm afraid, I cannot recall.

[Scott Brison, Liberal, Kings—Hants, NS]

There are so many legislative branches it gets confusing.

On this, I'm told that all but one of the members or groups affected are opposed to the change.

Are you not aware of the overwhelming opposition of members or of organizations, these mutuals, to these changes and the notion of demutualization in principle?

[Jeremy Rudin]

I'm sorry.

Did you say that only one member of—

[Scott Brison, Liberal, Kings—Hants, NS]

Yes. The majority of the mutuals affected are opposed to demutualization.

[Jeremy Rudin]

Sorry, the majority of the companies?

[Scott Brison, Liberal, Kings—Hants, NS]

Yes.

[Jeremy Rudin]

And this is the majority of the management of the companies or the majority of the members of the companies, or which?

[Scott Brison, Liberal, Kings—Hants, NS]

The management speaking on behalf of the companies.

[Jeremy Rudin]

I'm certainly aware of the fact that there isn't strong constituency for demutualization of every one of these companies. That said, the government will bring forward is a regime that would allow the members of each company to decide whether to demutualize or not.

The government has no goal as to the number of companies, or indeed, has no goal to demutualize any of them, or is not opposed to demutualization. It simply wants to create a framework so that members can come to a fair and equitable decision about whether to proceed in that regard. If it applies to a minority or a majority of companies, the government's view is that it's still necessary and important to have a framework.

[The Chair, Conservative, James Rajotte]

Mr. Brison, can you give me a sense of how much longer you will be? You're sort of bumping up against your time.

[Scott Brison, Liberal, Kings—Hants, NS]

In a timely manner. I'm almost done.

[The Chair, Conservative, James Rajotte]

One minute or two minutes? One question?

[Scott Brison, Liberal, Kings—Hants, NS]

One minute but probably not much longer than the interruption took.

[The Chair, Conservative, James Rajotte]

The interruption took five seconds. You have five more seconds.

[Some hon. members]

Oh, oh!

[Scott Brison, Liberal, Kings—Hants, NS]

Okay.

The concerns expressed by those individuals who appeared before the committee hearing were that there would be impacts on companies that chose not to demutualize as a result of allowing demutualization of other organizations. Those impacts would be deleterious not only for those companies, but for the community they serve. In many cases there are impacts on rural and small town Canada for some of those.

So I would urge you to familiarize yourself with the feedback and the testimony of those organizations that appeared before this committee.

[Jeremy Rudin]

I would be happy to do that.

I would also point out that the government organized a consultation on this and we received many submissions.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Brison.

M. Caron s'il vous plaît.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I had five or six questions, but I'll limit myself to two.

With this section, how does the government plan on ensuring that an insurance company's reserves are indivisible in the case of demutualization? That's one thing the committee looked at in its study.

[Jeremy Rudin]

If I understand your question, you're talking about when an insurance company has a change in governance, whether the company is required to keep the reserves within the company. Is that it?

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Yes, if we're talking about a demutualization. The most studied case was the case of the Economical Mutual Insurance Company.

It had a million policyholders but only 943 mutual policyholders. The capital had been accumulated over a period of 125 years. Each mutual policyholder would have received about $1.6 million, while regular policyholders would have been left high and dry. My question is whether the government has provided any assurances in this bill that the reserves will remain indivisible in the case of demutualization.

[Jeremy Rudin]

The goal of the bill and the associated regulations is to create a fair and equitable process to move forward with demutualization if enough members support this process. If it becomes a company managed by shareholders and not by a mutual company, the reserves will be regulated the same way as they are for all insurance companies managed by shareholders.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

When I read the provisions in this section, I wondered whether we would end up seeing cases systematically referred to the courts. I think the Department of Finance should be responsible for making the decision about allowing demutualization, but it would be easy to put it on the courts to make that decision.

I think this takes responsibility away from elected officials. Instead of creating a framework to make a decision, they are making it easier to turn to the courts so the courts can do the work.

[Jeremy Rudin]

The government cannot enforce the regulations before the act is in force. All this bill does is create an option indicating that the courts have a role to play. In similar situations, the courts have often had a role to play: ensuring that the process is fair and equitable and that all stakeholders are represented. That's an option.