Finance Committee on May 29th, 2014

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

I'm just saying that for the regulatory route, the way you're expressing it is actually allowing for the possibility that the decision made by the government—and I'm not saying that they will do it—regarding one mutual company, in terms of that specific aspect, will be different from the decision made for another mutual company in a similar situation.

[James Wu]

All I would say in response to that, sir, is that we heard loud and clear the concerns of the stakeholders during the June 2011 consultation process and subsequently...and I do appreciate your point that different companies have different views.

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

I understand that. You know that the organization that is basically the umbrella organization of the mutuals is actually opposed to the regulatory route and in favour of having something legislated, the way the amendment is proposed.

[James Wu]

If you say so, sir.

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

Okay.

The consequence of the proposed amendments—and, as I said, our amendments aim at the same objective—would be to ensure that those who hold a regular policy with the mutuals will be involved in the process. What's the drawback in that?

[James Wu]

Again, it seems to be moving forward very quickly with one key part of the entire framework, and again the entire framework, in our view, should be set out together with all the relevant important components so that everyone, all stakeholders, can see how the framework will operate. The way it is set up now under the Insurance Companies Act, that framework is articulated in the details of the regulations.

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

Some proposed modifications to this section actually relate to—and you probably have it in front of you—subsection 237(2), which seems to facilitate—and correct me if I interpret this.... I'll do it in French.

I apologize if I am reading the provision incorrectly, but I am talking about subclause 237(2) of the bill.

Am I wrong to think it would be easier for the Governor in Council to refer the case directly to the courts instead of making the decision himself?

[James Wu]

Ultimately the process has to be approved by the government, and the decision on whether to approve a demutualization returns to the Minister of Finance.

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

Does this amendment facilitate the involvement of courts or tribunals?

[James Wu]

Yes. Certainly the intention was to permit the government to consider the use of a court, but it's not specified here in the legislation what exactly the court would do. One possibility would be that the court would facilitate negotiations between all the relevant parties.

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

Okay.

[The Chair, Conservative, James Rajotte]

I want to clarify something with Mr. Wu.

You said in following up on some of the questions that the government wants to establish a framework and have some flexibility now so they can detail everything in regulations. But if you look at the first amendment, it says, “All policyholders of a policy issued by the mutual company, whether or not they are eligible policyholders, are entitled to notice of and to vote at a special meeting.”

That phrase “whether or not they are eligible policyholders” occurs in all of the amendments we're dealing with in this clause.

Isn't that one of the concerns I think you—

[James Wu]

Yes.

[The Chair, Conservative, James Rajotte]

—and the department would have, whether or not they are eligible policyholders? It's a definition of what an eligible policyholder is, and subsequently it's the view that eligible policyholders, however you define that, are the ones who should be voting.

[James Wu]

I think that's a fair statement. In effect the proposed amendments would set the definitions for these terms more or less in legislation as opposed to leaving it for regulations. Indeed it also purports to, I believe, change other definitions in regard to when there is quorum for special resolution votes and other corporate matters that are already set out in the Insurance Companies Act under other provisions.

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

We'll go back to Mr. McKay.

[John McKay, Liberal, Scarborough—Guildwood, ON]

I would have thought, if the Canadian Association of Mutual Insurance Companies felt this was a necessary precondition to demutualization of any company, the government would have had a better reason than just taking care of it in regulations, and doing it by case by case.

Obviously the companies themselves are concerned about inequities that may well be generated by virtue of just simply leaving it to the backrooms of regs. So I'm still having trouble understanding why, if the mutual insurance industry—and I'm assuming these folks do represent the industry—are saying there is a need for protection of all policyholders, eligible or otherwise, by means of a notice or a vote and a special meeting.... If the industry is saying that, and if the industry is saying this is a necessary protection for all policyholders, really the government should have some darn good reason why this isn't necessary.

[James Wu]

Thank you very much for the question.

I would perhaps just refer back to your reference to the consultations that occurred in June 2011. I think it was clear, as it was articulated already, that there is actually seemingly little consensus on various aspects of frameworks such as who has the right to vote and where the benefits should go from such a demutualization—

[The Chair, Conservative, James Rajotte]

That's little consensus within the industry.

[James Wu]

It's not clear to me there is consensus.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Maybe consensus is a bit in the eye of the beholder because I don't think Mr. Brison would be putting this forward unless this was requested by the Canadian Association of Mutual Insurance Companies. I'm assuming that's an umbrella group. I'm assuming it represents the industry.

[James Wu]

I would defer to them to speak to whom they represent and whom they don't represent.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Well, do you think they represent the industry or not?

[James Wu]

I would just refer back again to what is already in the public domain—the consultations from the June 2011 process. I think our summary there is very clear that there's no consensus.

[John McKay, Liberal, Scarborough—Guildwood, ON]

There's no consensus apparently.