Thank you, Mr. Chair.
I'm going to be sharing my time with my colleague Steve Masnyk from SkyBridge Strategies.
My name is Normand Lafrenière, and I am the President of the Canadian Association of Mutual Insurance Companies, or CAMIC for short.
CAMIC represents 79 mutual insurance companies across Canada that ensure people's cars, homes, farms and businesses.
Mutual insurers were formed over a period of 100 years, beginning in 1836. They were formed because farmers could not find farm insurance or find it at a fair price.
Mutual insurers are owned by their policyholders. There are no stockholders or share capital, and they aren't on the stock market. Policyholders elect their company's board of directors and vote on the major orientations taken by their company.
The premiums of the many serve to pay the losses of the few. When a profit is generated, that profit is transferred to the surplus of the company to be better able to pay future claims, is refunded to the members or is used for the betterment of the community.
Canadian mutual insurers have formed two mutual reinsurance companies—their own reinsurers—to share risks amongst mutual insurers and access reinsurance in the international market.
They have also created guarantee funds to fully compensate policyholders should an insolvency occur. In passing, I would like to mention that, over the past 60 years—ever since guarantee funds have been in place—no mutual insurance company has gone under.
Today, CAMIC member companies have a 15% market share of the non-governmental Canadian property and casualty insurance market. Being especially present in rural Canada, mutual insurers insure 75% of Canadian farms.
We are here today to address the issues of cyber-risks and threats to the financial system in Canada and, in particular, how open banking could possibly increase the risk of cyber-attacks.
Generally speaking, the insurance sector is not a likely target of cyber-hacking. Apart from insured's credit card and debit card numbers, mutual insurers generally keep very little information of interest to cyber-hackers.
We do, however, have serious concern about the discussion at hand today, especially as it pertains to open banking. This is a concept that began in Europe, the U.K., Austria and Japan. The concept was put in place only recently in those jurisdictions, so there is very little anecdotal evidence on how well or not well it is working.
We can, however, offer thoughts about the discussion points raised by the government when it began its recent open banking consultation.
CAMIC is particularly concerned that the open banking concept will undermine the long-standing prohibition barring banks from engaging in the insurance sector. This long-standing prohibition, supported by governments of all stripes, is in place to protect consumers of insurance from credit-granting institutions coercing them into buying an insurance product that is not appropriate for them. We hope that any open banking framework would not undermine this legislative prohibition.
I would now like to ask my colleague, Steve Masnyk, to touch on other concerns related to open banking and the cyber risks.