Bonjour.
My name is Mark Tonnesen and I'm the CEO for Triad Guaranty Insurance Corporation. Prior to joining Triad I was vice-chairman of RBC Insurance in Toronto.
Triad is a private mortgage insurance company, headquartered in the United States, and is currently before OSFI with a draft application to provide this insurance in Canada. It was founded in 1987, based on the philosophy of strong risk management, product innovation, and superior customer service. Our products are primarily offered in areas where affordable housing is a priority. In fact, our typical customer is a first-time homebuyer with an average house price of around $150,000.
I am here to support the government's intention to open this market to more providers. This move will create upsides for taxpayers and consumers alike. First, adding more market participants will reduce the risk to taxpayers and increase the stability of the housing market by spreading the risk across multiple providers; reducing the risk assumed by government providers; bringing additional diversified capital into the market; and eliminating the risk where one private mortgage insurance company could pull out of the market, leaving the entire Canadian housing sector in turmoil.
Second, consumers will benefit from increased competition, through better service, lower costs, and product innovation, all of which makes home ownership more affordable. Monopolies, even duopolies, do not provide the same incentives for customer service, product innovation, and price reduction. Why would they, when theirs is a captive market?
Canada has among the highest regulatory standards in the world, and because of this, a competitive market will also be a secure market. Apart from the very rigorous review that OSFI conducts to ensure the viability of MI providers, every province regulates the conduct of the insurance market. Numerous regulations specifically prohibit the types of activities about which some members and competitors are concerned.
It is vitally important for the government to ensure the safety of the market. It is also important to ensure that consumers have a choice, and the choice is not simply between the government and a private sector monopoly. This creates too much risk for the government and too little benefit for the consumer.
I'd be pleased to address any of the issues in more depth at your convenience, Mr. Chairman.
Thank you.