Thank you, Mr. Chairman.
CAMIC commends the government for tabling a review of the financial services legislation that maintains unchanged subsection 416(2) of the Bank Act that prohibits the retailing of insurance in the branches of a bank. In our view, this will maintain the level playing field in which the insurance industry currently operates.
With respect to the amendments brought to the Insurance Companies Act, CAMIC concurs with all the amendments that specifically target mutual insurance companies, i.e., the amendment to paragraph 449(2)(c), which clarifies the exemption from the Property and Casualty Insurance Compensation Corporation afforded to mutual insurance companies' members of the fire mutuals guarantee fund.
We also support the amendment brought to subsection 346(3) of the Insurance Companies Act to recognize the audit work done by an actuary who is not the actuary of the company. While this amendment is brought to reflect the new audit guidelines set by the Institute of Chartered Accountants, it also serves provincially licensed mutual insurance companies that often do not have an appointed actuary and will simply depend on the actuary of the audit team to ascertain a company's liabilities.
Our only disagreement is on not seeing any measure requiring property and casualty insurers to set up catastrophe reserves. Because of our lack of action on this front, many foreign companies are better prepared than Canadian companies to face major natural or man-made catastrophes.
Foreign-owned property and casualty insurance companies doing business in Canada often benefit from taxation provisions in other countries that allow them to set aside reserves, free from income tax, to meet their obligations in cases of labour catastrophes. For its part, the Canadian system considers as profit in any given year sums of money received but not reserved for the payment of a specific claim.
To establish a level playing field with their foreign competitors, many Canadian-based companies have resorted to establishing what are called offshore companies. Through these offshore companies, they can obtain tax advantages equivalent to those enjoyed by many foreign companies doing business in Canada. For their part, mutual insurers do not resort to the offshore companies' concept and find themselves at a tax disadvantage with many of their foreign-owned and Canadian-owned competitors.
The solution lies in allowing the establishment of a man-made and natural catastrophe reserve in Canada that is free from income tax, similar to the catastrophe reserve concept implemented in many European countries and in Japan and in tune with the commitment of the U.S. federal government to help should a major terrorist or man-made catastrophe occur in the U.S. Our catastrophe reserve proposal is self-financing, as the investment income generated by these reserves would be taxable.
We also regret the fact that nothing is being done to help create mutual insurance companies in Canada. Fifty years have gone by since the last mutual insurance company was created. We should reassess the minimum amount of capital needed for setting up a mutual insurance company, if we want to help the future growth of this kind of investment.
Moreover, the mutual insurance companies will be holding a conference on the modern state of the mutual principle all day tomorrow. There will be a reception at the end of the day, and we would appreciate it very much if you, honourable members, could come to join us tomorrow at 4:00 p.m., at the Château Laurier.
This concludes my presentation. Thank you very much.