(p18 / 2466) - Jim Maloway (Elmwood): I want to begin with the Insurance Branch, by asking the minister about the vanishing premium policies in life insurance, that was, they were widely sold throughout Canada and the United States since 1960. [Bonk: Typo-? 1960-? or 1980-?]
There have been a number of lawsuits, a myriad of lawsuits, resulting because over the years the promises of eventually paying no premiums because the investments would make up what the premiums would have been, did not materialize and so I understand there are lawsuits right across the country.
I want to know how many there are in Manitoba and what stage they are at and what companies, which life insurance companies were selling these products here.
Mr. Radcliffe: Mr. Chairman, my director tells me that, in fact, we have had possibly four to six inquiries in Manitoba on this issue of vanishing premium life insurance policies.
There are no lawsuits of which we are aware in Manitoba.
This is a matter that is being monitored, I am told, quite closely by the Canadian Council of Insurance Regulators.
We have a file on this topic in the Insurance office. There were a number of mediated settlements, I am told, between the corporations and the particular individual claimants or people who were interested and involved.
I am told that this is in fact a significant problem in the United States of America but has not been anywhere near as large a problem in Canada.
[Guaranty Funds / Insolvencies]
Mr. Maloway: A final couple of questions to the Insurance Branch, I would like an update on what is happening with CompCorp and PACIC. By way of background, these were programs that were I do not know if initiated by but certainly participated in by the former NDP government when Al Mackling, I believe, was the minister, and, essentially, it came about because of an insolvency of an insurance company known as Northern Union.
I think the member is vaguely aware of that particular company and the circumstances involved in its demise. Because of that and Strathcona and other insurance companies that went under, the provinces, and who initiated it I do not know, but the provinces got together and basically did what they did with Combap [phonetic], the lemon law equivalent, and set up this national pool. It has been refined a couple of times because I think it did not respond properly, at one time, in sufficient limits, so there were some adjustments made to it, and the same is true with the life insurance. They did the same thing with the life insurance. I know that when the big failure hit, when Confederation Life went under, that was the first big test. I think it was the first big test. There were some other tests, but they were of a smaller dimension.
So could you update us as to what the current requirements, rules, are with regard to both of these programs and just provide us with a little history because we have not actually dealt with this subject in Estimates now for some years because of time constraints.
Mr. Radcliffe: Mr. Chairman, I had not been familiar with the CompCorp background, so I thank my honourable friend for the opportunity to learn about that.
CompCorp, for the purposes of the record, is a guarantee or a backstopping on life insurance policies, annuities, disabilities, registered retirement savings plans. The coverage, I am told, for life insurance is limited to $200,000. This is on the failure, as we were discussing, of a registered life insurance corporation. The limit for backstopping loss for failure of a corporation on an RRSP is $60,000 and $2,500 monthly for disability. This is a national scheme, and it is at the corporate level. These limits have been quite stable, consistently stable for some length of time, and I am sure I am just reconfirming knowledge that my honourable colleague already has that this has been in place for some time.
PACIC applies to the general insurance. The limit, I am told, has been raised now to $250,000 as an upper limit for a claim, for an insurable claim, one that is found to be a proper claim; 70 percent of the unearned premium is covered by PACIC up to the cap of $1,000, therefore that would be an upper limit cap of $700 on PACIC. These are new limits apparently on PACIC. Some new innovations on the PACIC scheme, which also is a national policy across the country, is that the contributions by the insurance corporations are premium driven. It is collected immediately at the front end on the payment of the premium, and it is collected annually, so this obviates the necessity of relying on letters of credit or reactive claims after the fact, after there is a claim been made.
So these are two insurance schemes that are like a guarantee which are in place, which are practised in Manitoba and the Superintendent of Insurance looks on them with great favour.