Thank you, Mr. Chair.
Members of the committee, thank you for the opportunity to participate in the industry committee's study of the service sector, and congratulations for taking on this important topic.
The Canadian Life and Health Insurance Association, established in 1894, is a voluntary trade association that represents the collective interests of its member life and health insurers. The Association's membership accounts for 99 per cent of the life and health insurance in force in Canada and administers about two-thirds of Canada's pension plans.
We have distributed to you our annual publication on Canadian Life and Health Insurance for 2006. A 2007 edition will be printed in the next few weeks and forwarded to you for your information.
Canada's life and health insurance industry is in the business of providing personal financial security, helping to protect individuals, their families, and their businesses against the financial risks of premature death, illness, and retirement.
The industry provides a wide range of financial security products to about 26 million Canadians and their dependants in all walks of life and age groups. In addition, Canadian life and health insurance insurers operate in more than 20 other countries around the world and constitute one of Canada's most important export industries.
Products offered by the industry include individual and group life insurance; retirement and investment contracts, such as individual and group annuities, RRSPs, RRIFs, and pensions; disability insurance to provide replacement income for individuals who are unable to work due to illness or injury; health insurance benefits supplementary to public plans; critical illness insurance to provide financial assistance in the event of serious health problems; and long-term care insurance to help individuals prepare for a time when they can no longer function independently.
In 2006, the life and health insurance industry paid out over $53 billion in benefits to Canadians; that's about $1 billion every week. Over 90% of this amount went to living policyholders, with the remainder paid out as death benefits.
Canadians buy their life and health insurance in a highly competitive marketplace, with 106 life and health insurers from Canada, the United States, Britain, and other countries operating in this country. At the same time, Canadian-owned firms represent over 80% of the marketplace, demonstrating that this remains a predominantly Canadian owned and operated industry.
The life and health insurance industry is a major employer in Canada, with more than 120,000 people working in the business. Of that, close to 45,000 are in management and administrative work and 76,000 are in sales. On average, these are high value-added jobs for Canadians, with competitive salaries and benefits.
The life and health insurance industry is also a significant investor in Canada's economy, with over $400 billion in assets held in the country on behalf of its policyholders at the end of 2006. Investments in Canadian corporations, through bonds and stocks, constituted 55% of the total. The financing of Canadian governments at all levels is another major investment, amounting to 18% of the total.
Canadian life and health insurers represent one of Canada's international success stories. Its major companies, headquartered in Canada, are widely acknowledged as leaders in the global marketplace. The three largest Canadian life and health insurance companies are in the top 10 in the world, measured by market capitalization. They have established a strong presence in various foreign markets — in the United States, Europe, and Asia — over the years. In 2006, for example, Canadian life and health insurers received 56% of their worldwide premiums from outside Canada and held 56% of their worldwide assets in foreign jurisdictions.
The financial strength of Canadian life insurers is one of the reasons they have been able to become major international players. Standard & Poor's, the rating agency, has in fact stated that the Canadian life and health insurance industry is among the most financially strong in the world.
Mr. Chair, I want to emphasize to the committee the importance of financial services to the Canadian economy and the significant potential for Canadian services internationally. The Canadian financial services sector offers high-quality employment and security. Canadian life and health insurance companies are global leaders in exporting services, and we encourage the Government of Canada to continue to seize opportunities to foster an environment that allows us to strengthen our role as world leaders in services.
Given the ever-changing world economy and the increasing pace at which recent changes have been occurring, the committee's study will be very helpful and timely in achieving this goal.
In closing, I'd like to leave the committee with a number of recommendations for your consideration. First, Canada needs to develop a services sector innovation strategy in order to increase the competitiveness of Canada's domestic services sector and the competitiveness of Canada's economy on the international stage. This includes the development of skilled human resources, opening of markets to trade and investment in services, reducing the regulatory burden, and removing internal trade barriers.
Second, I have noted Canada's success story for exporting our insurance expertise abroad. We can only be successful if foreign governments open their markets to our companies and allow them to operate under the same rules as their domestic companies. Therefore, it is essential that Canada participate actively in bilateral and multilateral trade deals that promote Canadian industry interests. More specifically, in the present Doha Round of negotiations of the WTO, Canada must push for the inclusion of a meaningful services agreement. Services interests should in no way be held hostage by other negotiations.
Third, and related to this, we need to ensure that the Canadian government is well resourced in order to represent our interests around the world. This would include providing staff in our missions abroad who are knowledgeable about the services sector.
Fourth, one of the core gaps in understanding the services sector in Canada is the lack of comprehensive data available from Statistics Canada. We would welcome the opportunity to work with the government towards improving this situation.
Finally, the importance of the services industry to Canada warrants a more thorough review, and we encourage the committee to undertake a services study with the same ambition with which it conducted its excellent manufacturing study.
Thank you again, Mr. Chair, for the opportunity to appear before the committee today. I would be pleased to provide any further input and respond to any questions you may have.