Evidence of meeting #3 for Special Committee on Cooperatives in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cooperatives.
A recording is available from Parliament.
Executive Director, National Office, Co-operative Housing Federation of Canada
I don't know the exact figure, so I wouldn't want to be quoted on the record here.
Executive Director, National Office, Co-operative Housing Federation of Canada
We can find out.
Liberal
Mauril Bélanger Liberal Ottawa—Vanier, ON
I'm sure everyone can find out.
On the matter of the renewal of mortgages and this difficulty of having to deal with closed mortgages, my information from CMHC is that they are open to that structure where you'd go to an outside provider of a mortgage and they would still maintain the payments, the subsidy, but that would have to happen at the time of renewal. Once you've signed a closed mortgage...they could—I suspect you're right—but for that to happen they need to be told, and they're not being told. In the absence of a directive from the government, their hands are a bit tied. They have to respect that they have a closed mortgage and therefore have to deal with that.
I just want to make sure that we're aware that indeed the pilot project Mr. Harris has mentioned a couple of times could work as long as it's caught at the time of renewal of mortgage. Are we in agreement there?
Executive Director, National Office, Co-operative Housing Federation of Canada
That's correct.
Liberal
Mauril Bélanger Liberal Ottawa—Vanier, ON
All right. Thank you.
For The Co-operators, is it possible, sir, to have a copy of your notes sent to the clerk so that we can get them? I tried to follow all of the.... I need to reread it.
Liberal
Mauril Bélanger Liberal Ottawa—Vanier, ON
Yes.
Have these proposals been suggested to the government before? If so, in what format and when?
Senior Vice-President, Senior Counsel and Secretary, The Co-operators Group
Well, I actually did provide a copy earlier today to the clerk, or I gave it through the CCA, so you will get a copy of the material.
I'll speak a little slower now. I have done that a couple of times and I was able to do it in 10 minutes, but obviously it's very hard to meet that timeline, so I was trying to get it in.
In terms of the proposals, the Canada Cooperatives Act, in its current incarnation, is really new—relatively new. It was 1998, which is, what, 13 or 14 years ago? I joined The Co-operators in 1996. I rose in the ranks in the legal area, and I wasn't in charge, really, probably until about 1994 or 1995. You were just sort of starting yourself. I really didn't know much about cooperative law. At that time, when it came in, I wasn't really that involved. Over time, I've had the opportunity to be involved with it, and you start to see some of the problems with it.
The specific issues around modification—there hasn't been a review I participated in where we've made those suggestions. Where we have actually made a suggestion is on the Butterfills stuff. We have provided information with respect to the demutualization proposals for P and C insurers.
Senior Vice-President, Senior Counsel and Secretary, The Co-operators Group
Sorry.
Liberal
Mauril Bélanger Liberal Ottawa—Vanier, ON
I'm aware that your CEO sent a letter to the chair of this committee. Do you know if the CEO has any objections to that letter being shared with the members of the committee?
Senior Vice-President, Senior Counsel and Secretary, The Co-operators Group
I think I'd be a little stronger than that. The Co-operators is a very transparent organization. If we send a letter to the chair of a committee and to the clerk, we intend it to be shared with the committee. I think she will stand behind those comments.
Liberal
Mauril Bélanger Liberal Ottawa—Vanier, ON
In the notes you sent, is there more information on the Butterfills amendment?
Senior Vice-President, Senior Counsel and Secretary, The Co-operators Group
Yes. There is actually a longer reference. I wasn't able to rattle on, but I'd be happy to provide you with further information on that.
Liberal
Mauril Bélanger Liberal Ottawa—Vanier, ON
Please do.
Finally, Mr. Gazzard, is there material, a document, on equity co-ops that one could read to help us understand that?
Executive Director, National Office, Co-operative Housing Federation of Canada
No, there isn't. There is no generic document. There have been many proposals going out, most notably in Alberta, and there are some equity co-ops there, but those are proposals around specific projects. What we want to do is develop something that builds on the one-pager that I did for this meeting—mine, too, I guess.
Conservative
The Chair Conservative Blake Richards
All right. Thank you very much.
We will now move to the second round. We will open that round with Ms. Gallant.
Conservative
Cheryl Gallant Conservative Renfrew—Nipissing—Pembroke, ON
Thank you, Mr. Chairman.
All the questions will be through you to our witnesses. Thank you very much.
My colleague asked about the difference between the mutual companies compared to the cooperatives. With regard to the cooperatives and the entities involved in the mutual company, I am wondering whether there has ever been a situation where a claim was not able to be paid because the insurer did not have the assets to pay it.
Senior Vice-President, Senior Counsel and Secretary, The Co-operators Group
I'm not sure I can answer that question specifically. To the best of my knowledge, there has not been.
Mr. Taylor can comment on this, but my understanding of the Ontario mutuals is that they are probably the best capitalized of most insurance companies. They have a dollar of capital for every dollar of premium, and as you know, the statutory requirement is one to three.
I would suspect that a company might go out of business—and I can't talk about the history—but generally we are like any other insurance company. We are required to be reserved like any other insurance company, and like any other insurance company, I suppose there is a possibility of failure. But to the best of my knowledge, in my history that has not happened.
Mr. Taylor might be able to comment on that.
President, Ontario Mutual Insurance Association
There has never been an insolvency that has left any policyholder short of claims or unearned premiums among the Ontario mutuals.
We actually have a unique guarantee fund that's been established in Ontario. The capital of the mutuals collectively stand behind the insolvency of any one mutual, so each mutual does not stand on its own, from an insolvency standpoint. We essentially guarantee solvency as a group, and that is through the Fire Mutual Guarantee Fund, which was established in the mid-seventies
Conservative
Cheryl Gallant Conservative Renfrew—Nipissing—Pembroke, ON
In terms of rating the liabilities you are covering, is there a rating agency? How are the risks assessed? I'm not talking about within your company. How are they assessed from the outside to legitimize the risk value?
Senior Vice-President, Senior Counsel and Secretary, The Co-operators Group
I'll speak for The Co-operators first.
We're an insurance company like any other insurance company, so we're subject to all of the same rules and prudential regulation as others are subject to. As you likely know, for federally regulated insurance companies, we have requirements with respect to actuarial assessment of our liabilities. We have requirements with respect to peer-to-peer reviews that are done; that means someone outside does a review of our actuarial liabilities. We also have a pretty stringent system of DCAT testing.
As a federally regulated insurance company, we're like any other insurance company. We're assessed in exactly the same manner. We don't have some special break whereby we can assess risks differently. We assess exactly the same as others do in the marketplace.
Conservative