r e f l e c t i o nA news l e t t e r o f the Canadian As so c ia t i on o f Mutua l In surance Companie s

Spring | 2009

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Two icon figures leave the mutual insurance industry

Claude Robitailleleft Groupe Promu-tuel on April 9, 2009 after spend-ing 6 years with the organization as Chief Executive Officer. Claude

joined Groupe Promutuel in January 2003. Under his leadership, Groupe Promutuel member companies have, as a group, reached a gross premium volume exceeded by only three other insurers in the province. In October 2004, Claude joined the CAMIC Board and worked hard at strengthening the financial and managerial reporting of CAMIC’s President to the CAMIC Board. At CAMIC’s next annual meeting to the held on October 6, 2009, there will be an election to complete the one year left on Claude’s term of office.

In MemoriamShaRon P. doxtatoR (1951-2009)

Sharon P. Doxtator, Manager of Usborne & Hibbert Mutual Fire Ins. Co., passed away on Friday April 10, 2009 at the age of 58.

Sharon joined Usborne & Hibbert in July 1987 and was promoted Manager in 1997. Over time, Sharon has built a reputation for her prudent management. She leaves behind a very well capitalized insurance company that makes the envy of the mutual insurance industry.

311 McArthur Avenue, Suite 205Ottawa, ON K1L 6P1613.789.6851

Our missionhelp mutual insurers become the property and casualty insurers of choice in the Canadian market place by providing information and advocacy, by developing services and by negotiating group supply agreements.

• • • • •Glen JohnSonretired from the Ontario Mutual Insurance Asso-ciation (OMIA) on March 26, 2009 after spending 31 years with the asso-

ciation. He coordinated OMIA’s training program from 1978 to 1986, was promot-ed Vice-President in 1986 and President in 1989. Through his three decades with OMIA, he served on most of OMIA’s stand-ing committees and on special commit-tees that explored such initiatives as sol-vency monitoring, financial services, central computer, auto insurance issues and joint governance.

2008-2009 Board of Directors• • • • •exeCutiVe CoMMittee

diReCtoRS

aSSoCiation’S PReSident

Ray White

Chairman – Eastern CanadaManager – SouthEastern Mutual Ins. Co.

blaiR CaMPbell

Director – Eastern CanadaCorporate Secretary & General Counsel – PEI Mutual Fire Ins. Co.

noRMand lafRenièRe

daRin neSSel

2nd Vice Chairmain of the Board – Western CanadaManager – Mutual Fire Ins. Co. of BC

fRank RideR

Director – OntarioManager – South Easthope Mutual Ins. Co.

Rob foRSythe

1st Vice Chairman of the Board – OntarioSenior Vice President – Farm Mutual Reinsurance Plan Inc.

Randy ClaRk

Director – Western CanadaPresident & CEO – The Portage la Prairie Mutual Ins. Co.

Joe dietRiCh

Past Chair – OntarioManager – Trillium Mutual Ins. Co.

yVan RoSe

Director – Quebec Manager – Promutuel L’Abitibienne

On January 9, 2009 CAMIC presented its pre-budget submission to the Federal Department of Finance. In our document, we have identified four areas of concerns and made recommendations to address them. Our recommendations were:

1. To increase funding to help municipali-ties address their infrastructure deficit;

2. To modify the tax treatment of Deferred Policy Acquisition Costs (DPAC);

3. To maintain the ban on banks selling insurance in their branches and the ban on their user of bank customer informa-tion to target their marketing of insur-ance products; and

4. To supervise credit card companies as they charge higher merchants’ discount rates for purchases made by clients with “special” credit cards.

MuniCiPal infRaStRuCtuRe

Our interest in addressing the municipal infrastructure deficit is related to the impact that inadequate sewer systems, and insecure roads and bridges have on insurance claims and injuries. Our document further empha-sized that while we encourage the govern-ment to inject financial stimulus in the econ-omy, it is very important to ensure that any such stimulus increase the productive capacity of the economy in the future. The test before committing to any tax cuts or government

CAMIC’s pre-budget submission

spending should be “Will this stimulus mea-sure increase the productive capacity of our economy?” In our view, investing in sewer systems and in municipal roads and bridges meet that test but may not be as expedient as the federal government would wish.In the subsequent budget, the federal govern-ment injected significant additional money towards municipal infrastructure projects – however, these projects must be completed within 2 years and require the financial contribution of provincial and municipal governments. These conditions will prevent a significant number of worthwhile projects from being implemented.

defeRRed PoliCy aCquiSition CoStS (dPaC)

The Quebec Revenue Agency has assessed most of our Quebec based member compa-nies for inadequate deferral of policy acquisi-tion costs.The additional assessment is worth about $10 million.

For its part, the Canada Revenue Agency has not yet reassessed our Quebec members for inadequate deferral of policy acquisition costs, but it has reassessed a number of stock companies and it is therefore likely that our members will be reassessed by the Canada Revenue Agency. It is to prevent such a reas-sessment from taking place that CAMIC raises this issue with both the Federal Department

of Finance and the Canada Revenue Agency. All we are asking the federal government is to accept that insurers use, for tax purposes, the definition of policy acquisition costs and cost deferral included in generally accepted accounting principles. In a time when insur-ers need to rebuild their capital, it is essential to get this minimum level of cooperation from the government.

Maintain ReStRiCtionS on bankS inSuRanCe Retail-inG PoWeRS

This issue will be revisited along with the revision of the financial services legislation in 2011. By raising this issue now, we just want to highlight that our position has not changed and that the arguments that we raised in the past are still as valid today as they were at the time of the last review.

diSCount RateS ChaRGed by CRedit CaRd CoMPanieS

Credit card companies, VISA and MasterCard, have changed their requirements to be able to possess a Mosaic or an Infinite credit card. Due to these changes, the proportion of the population which posses a Mosaic or an Infinite credit card has increased from 5% to 35% in one year. While these newly issued cards give their owners some more benefits than their previous card, they cost much more to merchants. Merchants, including the insurance industry, should oppose attempts by VISA and MasterCard to significantly increase their fees to merchants. This is a duopoly that deserves to be controlled by governments.

Further, VISA and MasterCard are said to be attempting to purchase the Canadian and fairly priced Interac system. CAMIC will fol-low the lead of the Canadian retail Council and others in supporting solutions which limit the price charged for financial transac-tions in Canada.

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FUTUrE AnnUAL COnVEnTiOnSoCtobeR 4–6, 2009the Westin harbour Castle toronto, toronto, on

oCtobeR 3–5, 2010fairmont Chateau lake louise, lake louise, ab

oCtobeR 2–4, 2011fairmont tremblant, Mont tremblant, qC

Gross Premium Written by Member Companies• • • • •

ReGion CoMPany naMe GRoSS PReMiuM WRitten ($000) 2008 2007

MaRitiMeS Antigonish 4,300 4,400

Carleton 1,883 1,912

Clare 2,138 2,305

Fundy 3,030 3,133

Kings 6,314 6,029

Pictou 981 891

Prince Edward Island 13,814 13,179

Southeastern 5,443 5,325

Stanley 5,597 5,603

United General 5,336 5,349

Subtotal 48,836 48,126

quebeC Abitibienne 27,337 24,975

Appalaches 26,066 22,948

Beauce 26,269 24,127

Bellechasse 13,263 13,725

Bois-Francs 14,999 14,067

Coaticook-Sherbrooke 15,327 14,254

Deux-Montagnes 20,803 19,433

Drummond 8,444 7,389

Gaspésie - Les Iles 21,845 18,905

Groupe Estrie-Richelieu 43,231 41,876

Groupe Ledor1 69,800 66,899

Haut St-Laurent 15,422 13,008

Lac St-Pierre - Les Forges 20,766 19,293

Lanaudière 31,370 31,000

Montmagny - L’Islet2 13,392 17,451

Monts et Rivers 11,227 9,872

Portneuf - Champlain 36,401 33,774

Les Prairies 16,897 15,802

Réassurance 124,451 143,616

Des Riverains3 20,407 20,566

La Vallée 11,436 10,328

Valmont 18,935 17,064

Vaudreuil-Soulanges4 20,135 17,821

Verchères 14,592 12,979

Subtotal5 518,364 487,556

1 The number under the 2007 column is the addition of the GPW of Promutuel Dorchester and Promutuel Lévisienne-Orléans.2 The number under the 2007 column is the addition of the GPW of Promutuel Montmagny and Promutuel L’Islet.3 The number under the 2007 column is the addition of the GPW of Promutuel de L’Est and Promutuel Témiscouata.4 The number under the 2007 column is the addition of the GPW of Promutuel Vaudreuil and Promutuel Soulanges.5 Promutuel Réassurance is not included in the subtotal and total to avoid double counting.

ReGion CoMPany naMe GRoSS PReMiuM WRitten ($000) 2008 2007

ontaRio Algoma 9,394 8,842

Ayr 16,005 15,034

Bay of Quinte 15,032 14,433

Bertie & Clinton 9,267 8,598

Brant 5,775 5,775

Caradoc Delaware 1,411 1,350

Cayuga 5,599 5,379

Co-operators 1,452,610 1,372,196

Dufferin 7,396 6,983

Dumfries 11,139 11,308

Erie 4,921 4,722

FMRP 169,077 154,809

(Business outside member companies) 30,132 22,914

Farmers (Lindsay) 65,021 61,200

Germania 10,968 9,885

Glengarry 8,594 8,296

Gore 223,511 198,192

Grenville 4,828 13,304

Grey & Bruce 1,934 1,633

Halwell 13,566 12,992

HTM 16,778 15,536

Hay 7,407 7,148

Howard 7,794 7,250

Howick 11,555 10,799

Kent & Essex 14,983 14,286

Lambton 14,946 14,126

Lanark 19,788 19,883

L & A 6,273 5,976

Max Canada 6,310 6,038

McKillop 7,343 7,249

Middlesex 8,885 8,418

Norfolk 4,856 4,608

North Blenheim 7,485 7,170

North Kent 6,113 5,785

North Waterloo 58,260 50,341

Oxford 8,538 8,758

Peel 30,051 27,887

Peel Maryborough 13,543 12,780

South Easthope 11,398 11,118

State Farm 1,265,219 1,139,081

Town and Country 8,913 8,429

Townsend 4,941 4,721

Tradition 10,708 10,044

Trillium 30,172 29,545

ReGion CoMPany naMe GRoSS PReMiuM WRitten ($000) 2008 2007

ontaRio Usborne & Hibbert 5,314 5,103

Wabisa 5,509 5,446

West Elgin 8,118 8,457

West Wawanosh 12,512 12,314

Westminster 7,273 6,826

Yarmouth 5,762 5,585

Subtotal6 3,523,850 3,263,743

WeSteRn Canada

Germania (SK) 1,926 1,860

Mennonite (Alberta) 4,516 4,288

Mennonite (Saskatchewan) 11,713 10,715

British Columbia 23,319 18,801

Portage La Prairie 151,317 140,085

Red River Valley 51,506 47,675

Saskatchewan Mutual 36,883 34,944

Subtotal 281,180 258,368

Canada total5,6 4,372,230 4,057,793

5 Promutuel Réassurance is not included in the subtotal and total to avoid double counting.6 Only the sales figure of FMRP with companies who are not members are included in the subtotal and total to avoid double counting.

for the last 5 years, Gerry Currie, Manager Risk Management & inspections for Portage la Prairie Mutual ins. Co. has been gather-ing information and alerting the Canadian Standards association (CSa international) about the failure of the element of electric Construction Space heaters 240 volts, 3,000 watt and greater range, more specifi-cally the 4.8 kW construction heater. the

following repeated complaints from Gerry Currie about fires caused by these heater elements, CSa international has imple-mented a task force to investigate the reasons for the failures and, if necessary, to come up with corrective measures.

CSa international failed to conclude that there is a design defect of these con-struction heaters. Consequently, it decided against a product recall and in favor of only issuing a safety notice (available on the CaMiC Web Site).

Survey of CAMiC Members re: The 4.8 KW Construction Heater• • • • •

in february 2009, the Manitoba office of the fire Commissioner also decided to issue a safety notice but added that a num-ber of fires have occurred from improper use and element failures in some mod-els of electric, fan-forced space heaters, called construction heaters (available on the CaMiC Web Site).

CaMiC Member companies have been surveyed to determine if their company has experienced losses related to fires caused by these heaters and, if so, if it was fol-lowing their improper use and/or improper installation.

the CaMiC board will analyze the results of the survey and decide if CaMiC should lobby if favor of a product recall of those heaters already in the market.

February 3, 2009 – Lobby Day in Ottawa

During its subsequent meeting, the CAMIC board decided to repeat the experience on Tuesday February 2, 2010. Again the event will be held at the Chateau Laurier and will

On Tuesday February 3, 2009, CAMIC held its third Lobby Day in Ottawa. The event started with a presentation by Sean Moore, one of Canada’s most expe-

rienced practitioner, writers and teachers on public-policy advocacy. Mr. Moore took in excess of 1.5 hour to explain the Art and Science of Public-Policy Advocacy (a.k.a. “Lobbying”).

His successful presentation was followed by an equally successful reception for MPs and Senators. In excess of 70 MPs and Senators came to the reception, reception for which pictures can be found in the Photo Gallery section of CAMIC’s Web Site.

be concurrent with the reception held by the Dairy Farmers of Canada also taking place at the Chateau Laurier. Both organizations attract rural MPs and Senators.

the 2009 Mid-term Meeting concentrated on the economic and financial crisis and the governance of our companies in such an environment.

sity for the board of directors to know how these investments perform. bruce gave us a process by which board members could be in a position to play their role of com-pany supervisors.

Dave Sitaram, President of the Canadian C o - o p e r a t i v e association (CCa), made a presenta-tion on the 100th anniversary of his organization. the

very strong link between the beginnings of mutual insurers and the beginnings of other cooperative organizations was made very clear. furthermore, it was mentioned that the quebec cooperative organization and the (french) Canadian cooperative organi-zation had recently changed their respec-tive name to include the word mutuality in recognition of the significant contribution

The 2009 mid-term meeting• • • • •

Doug porter, deputy Chief economist at bMo Capital Markets made a very well prepared presenta-tion on the State of the Canadian, uS and Global

economy. now that a few weeks have passed, it is clear that his reading of the state of the Canadian economy was right and that the direction was nowhere near a recovery. the Governor of the bank of Canada subsequently proved him right.

Bruce Friesen, President of Global Manager Research, made a presenta-tion related to the investments made by mutual insurers and the neces-

of mutual insurers towards the cooperative movement. these two organizations are now respectively called the Conseil qué-bécois de la coopération et de la mutualité and the Conseil canadien de la coopération et de la mutualité (CCCM). CaMiC is a member of both the CCa and the CCCM.

our last speaker is a well known indi-vidual within the association com-munity in ottawa. paul Ledwell made a presentation on the latest trends in the governance of

organizations. Well versed in organizations of all sizes, he made clear that regulators do not expect the impossible from small organizations and the “Good Sense” is the prime quality regulators look for in any boards.

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CoMPlaint ReSolution PRoCeSS

Federal legislation and a number of provin-cial legislations require that each insurance company appoints an ombudsman within the company and have in place a third party dispute resolution mechanism.

To meet this “third party” requirement as efficiently and effectively as possible, CAMIC has set up its own third party dispute resolu-tion organization called “Mutual Insurance Companies OmbudService (MICO)”.

In turn, MICO has an agreement with the ADR Institute of Canada to provide MICO participating member companies with a mediator when a complaint is filed.

In particular, our procedure goes as follows:

The company representative addresses the insured’s complaint the best of his/her abil-ity. If unable to solve the dispute, the case is referred to the company’s ombudsman. If a solution is still not found, the insured is informed of the third party dispute resolution

Agreements between CAMIC and suppliers• • • • •

process and is directed to MICO’s Web Site www.mutualombudservice.ca for additional information and for access to a mediation registration form.

As soon as a complaint is registered, the Mutual Insurance Companies OmbudService (MICO) asks the ADR Institute of Canada to appoint a mediator. A mediation session is organized between the mediator, insurer and policyholder. Should the mediator not be able to bring the two parties to agree, the policy-holder still has access to the court system.

To date, all cases referred to a mediator have been solved at that level. Our system is cost effective and is consistent with the objective of relieving the court system of insurance related cases.

on-line inSuRanCe CouRSeS

As per our agreement with ILS Learning, employees, directors, agents and brokers of CAMIC member companies can purchase access to 127 insurance courses + 9 courses dedicated to adjusters. The CAMIC section of ILS’ web site include all of these courses.Price: $150 for the 7 adjusters’ courses + 127 general insurance courses or $100 for the 127 general insurance courses. To register please call ILS Learning at tel.: 1-800-404-2211 and mention that you are a member of CAMIC. Details can be found on CAMIC’s Web Site.

Centre for Study insurance operation (CSio)

as per our agreement with the Centre for Study of insurance operations (CSio), CaMiC members who wish to join CSio to gain access to CSio Standards and to have access to the CSionet are basically treated as one group of companies. in particular, mutual insurers which have a membership in CSio through CaMiC pay, as a group, only one one-time access fee of $21,000 (avoiding the $21,000 welcome fee per company), pay a yearly member-ship assessment based on the global busi-ness of mutuals with brokers (avoiding the $10,000 annual minimum assessment per company) and pay as a group for only 2 CSionet (as opposed to a CSionet per company).

Broker-insurer Connectivity• • • • •

iter8 (for download and upload)

as per our agreement with iter8, CaMiC members are given a discount off iter8’s list price for each type of license: upload, download and WaRP/xMl. they also ben-efit from the possibility of reducing the costs of the Professional Services provided by iter8 through grouping many mutu-als under contracts carried out under a similar timeline. details are posted on the CaMiC’s Web Site.

• • •

upload of data from the broker to the insurer

those working on the upload of data between the brokers and the insurer may wish to have access to Compuquote’s data exchange Service, to CGi’s Web service

calls for autoPlus Gold, MVR and hitS; as well as to applied Systems’ WaRP software to upload Private Passenger automobile and Residential business electronically from the agency Manager bMS and from keal bMS.

our agreements with Compuquote, CGi and applied Systems are an extension of similar agreements negotiated between these companies and Peel Mutual ins. Co. the outcome of Peel Mutual’s negotiations has been extended to other CaMiC mem-ber companies.

PReMiuM PayMent With CRedit CaRdS and debit CaRdS

Global PaymentsTM has been offering a mer-chant payment card solution package to CAMIC members for six years. As our volume of busi-ness has grown over time, Global PaymentsTM has reduced its fees applicable on credit cards and debit cards transactions. The latest reduc-tion was effective December 1, 2008. Through our agreement, you benefit from:

• Low credit and debit rates• Free set up of your Visa and MasterCard

accounts• A wide variety of multipurpose point of

sale terminals• Visa, MasterCard and Interac Direct

Payment sales deposits to your bank account of choice

• A cost effective recurring customer pay-ment solution

If you wish to take advantage of our agree-ment with Global PaymentTM, please contact Georges Dumitru from Global PaymentsTM at 1-866-937-5151 extension 5 or at 514-398-0418.

Actuary on the audit team and three-year peer review• • • • •

• • • • •

effective with the 2006 financial year, the Canadian institute of Chartered accountants (CiCa) requires that auditors « in almost all circumstances » must only accept an engagement to audit an insurance enterprise if there is an actuarial expertise on the engagement team performing the audit.

an agreement has been concluded with the actuarial firm J.S. Cheng & Partners inc. to conduct three-year peer reviews and be the actuary on the audit team of mutual insurers. being the actuary for many mutuals, J.S. Cheng and Partners inc. have developed an expertise in mutual insurers, which translate into more efficiency in delivering the service and further translate into cost savings for mutual insurers.

CDrg agreement

CaMiC has just signed an agreement with CdRG to become, on behalf of its member companies, one of the three companies having access to the services of the Red teams. CdRG has formed three Red teams whose role is to help CdRG member companies when the demand for their services is overwhelming.

by virtue of the agreement between CaMiC and CdRG, CaMiC members who use the services of any CdRG member company will have access to the CdRG Red team should a catastrophe occurs in the territory in which the CaMiC member does business.

this agreement is valid for one year. during that one-year period, CaMiC would welcome your comment on the quality of the services offered by any of the CdRG member companies and by the Red team if applicable.

VehiCle RePlaCeMent

CAMIC has a car Insurance Replacement Agreement with Hertz Canada Ltd. Hertz has agreed to provide specific benefits and rates to participating CAMIC member com-panies. Details can be found on CAMIC’s Web Site.

• • •

afteR houR ClaiMS SeRViCe

CAMIC has a “mutual insurance compa-nies” phone line with Crawford & Company (Canada). CAMIC covers the cost related to the toll free line while your company covers the cost of recording a claim and, if necessary, of dispatching an adjuster. The protocol for handling claims established by CAMIC can be modified to suit your needs.

MonitoRinG inVeStMentS

Global Manager Research is a p&c insurance industry investment monitoring firm which help management and the Board deter-mine how well your company’s investments are doing. In particular, Global Manager Research :

• produces, quarterly, the Property & Casualty Investment Monitor (PCIM);

• maintains a Database of Canada’s invest-ment managers of segregated and pooled funds broken down by style, objectives and investment returns; and

• each year, organizes a series of one-day seminars to give clients the opportunity to meet a number of portfolio managers.

CAMIC members are offered these ser-vices at a discount rate. Mr. Bruce Friesen, President of Global Manager Research, can be reached at (905) 842-4242. Details can be found on CAMIC’s Web site.

ReSeaRCh on inSuRanCe aPPliCantS

CAMIC has an agreement with CGI where-by CGI waives the initiation fee applicable to CGI’s claims tracking services; the initia-tion fees is waived for the use of the HITS system for personal property, the use of CTS for commercial lines, and the use of AUTOPLUS. In addition, CAMIC members benefit from a discount of $0.10 per HITS inquiry.

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