Evidence of meeting #90 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was industry.
A video is available from Parliament.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
Mr. Lafrenière, I don't know this issue of mutual insurance companies and the implications for farms and fishermen, though I grew up in a fishing town in northern British Columbia. I read the budget line items. It's expected to have an annual federal fiscal benefit of $10 million in 2018, when it comes into effect.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
Can you give 20 seconds of background? This is sort of an obtuse issue for me.
President, Canadian Association of Mutual Insurance Companies
On the fishing side, you may know the Pacific Coast Fishermen's Mutual Marine Insurance Company. In its case, I think the gross premium written is about $5 million. Every cent of its benefits is returned to its members. It has enough capital accumulated over the years so that when it does business with its members and it makes a profit, it returns 100% of that profit to its participating members. That's an example of a company that will be affected negatively.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
What exactly is it insuring? Is it insuring income, or is it insuring assets?
President, Canadian Association of Mutual Insurance Companies
It insures the boats, the fishing property, of those fishermen, and also their residences. It insures both. At the end of the year, it does $5 million in gross premiums written, and it returns the profits it generates to its members.
We see the same thing when we insure farmers. Farm mutual insurance companies make a profit, and they return that profit to their members.
Liberal
The Chair Liberal Wayne Easter
Thank you both.
I know it well. I deal with the mutual insurance company in P.E.I. I had a major fire at one time in my life, so I highly recommend insurance.
Mr. Albas.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Thank you, Mr. Chair.
I'm glad you had that public service announcement on a private loss and let people know about it. Get insured.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Exactly.
Thank you to all of our witnesses today. Again, one of the most fascinating parts about being a member of Parliament is that you get to know a little bit about many different things. I really appreciate the presentations by each witness today.
Mr. Rivers, I want to start with you. First of all, I understand your argument. I would like to ask you a question, though. Mr. Sorbara mentioned the tax credit and the non-refundable type. Do you think having a non-refundable tax credit can change the way someone responds to an incentive?
Associate Professor, University of Ottawa, As an Individual
I'm not quite sure what you mean.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Pardon me, I guess I should have phrased it better. For example, I wasn't even here yet when the tax credit for fitness for children was first introduced, but one of the arguments we heard from the Liberal Party was that it was not fair because it was not refundable, so in the last Parliament we made it refundable. That didn't prevent the Liberals from taking it away. Have you done any research on other tax credits like the child tax credit?
Associate Professor, University of Ottawa, As an Individual
No. I guess I would say there are two issues there. One issue that I brought up in my comments was that this, to me, looks like an overall regressive tax credit. I think making it refundable would change that, but the other issue I brought up is that it is not that effective or not that cost-effective, and you wouldn't address that issue by making it refundable.
Associate Professor, University of Ottawa, As an Individual
It would continue to have a small impact on transit usage and it would continue to be an expensive way to motivate people to take transit.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Yes. Obviously the government has introduced new tax credits, including for teachers. I would say perhaps that might be a great topic for you to look at at some point, because I know many school districts in British Columbia where the parent advisory councils give a payment to the teacher, and one of them, I know, gives $1,000 to the teacher, and then the teacher buys school supplies.
Now, if that person is being honest, I think we don't have an issue with that, but if that person then claims the tax credit for monies they were given, I don't think that's exactly what the tax credit was for.
I certainly appreciate the work you've done and your discussing your ideas here.
I want to talk to the mutual insurance companies. Many of yours are either mutual or co-operative, which basically means that at the end of the year, if there are any retained earnings, those are returned to your membership. Is that correct?
Chairman of the Board, Canadian Association of Mutual Insurance Companies
That's correct. It's pretty straightforward. We collect premiums to pay claims. Whatever is left over from our claims and our operating expenses we're able to return that back to our policyholder members, though we do need to keep an amount for reserves in the event of unforeseeable things. That reduces their operating costs and the price of their insurance. We haven't met anybody yet who likes to pay premiums for insurance.
Liberal
Liberal
Robert-Falcon Ouellette Liberal Winnipeg Centre, MB
Thank you very much.
I guess my questions are for Mr. Normand Lafrenière and Frank Rider.
I have a question on the tax credit.
Will this tax exemption have a real impact on the cost or availability of insurance for farmers or fishers? Are they able to find insurance elsewhere, or in some other way?
President, Canadian Association of Mutual Insurance Companies
They may be able to find insurance elsewhere, but they are the ones who set up the mutual insurance companies. They did this long ago, especially in the case of farmers. Fishers created their companies later. They set up insurance companies to ensure that insurance would be available at a reasonable cost, and that is still the case today. In addition, they sit on the boards of directors of our companies. Most of our business is done with farmers and fishers; they deal with mutual insurance companies, as they are their companies.
Chairman of the Board, Canadian Association of Mutual Insurance Companies
As a CEO of a mutual company myself, I would reiterate that for some people, eventually it will affect availability because we have a tendency to insure those things in rural Canada that the big P and C insurers don't want to deal with. Farming and fishing is one of those, so it eventually may affect availability.
President, Canadian Association of Mutual Insurance Companies
When the market was tight, other companies were leaving, and we were there to supply that market both for farmers and fishermen, and also for local communities. When the stock companies leave, we're there to stay. We have nowhere else to go. Basically we're there to serve them, and we have proven that in the past.
Liberal
Robert-Falcon Ouellette Liberal Winnipeg Centre, MB
How many farmers and fishers purchase insurance from the insurance companies you represent rather than from large companies?