© Copyright 2006 Rogers Publishing Ltd. The following article first appeared in the February 2005 edition of BENEFITS CANADA magazine.
Phase two of the Canadian Council of Insurance Regulators’ review of compensation practices.

The Canadian Council of Insurance Regulators(CCIR)is analyzing questionnaires looking at sales compensation practices within the group health insurance industry. The questionnaires went out to group health insurers last year and were returned in mid- December. As BENEFITS CANADA reported in December, insurance regulators are following the lead of New York state Attorney General Eliot Spitzer’s look at the practices of insurers and sales intermediaries.

“Our first step will be to complete the analysis, and once that’s completed, to circulate that information amongst the regulators,” says Jim Hall, CCIR chair. “We’re doing this as a harmonized information gathering process, rather than each individual jurisdiction going out and asking the same questions of the same companies.”

Hall notes group health and property and casualty insurers are being reviewed simultaneously to be able to compare and contrast them in terms of their practices. However, he says there is no timeline set as to when the data will be fully analyzed and available for review by the CCIR.

But some in the group health insurance industry are not waiting for regulators to finish their final analysis. In late December, the Canadian Life and Health Insurance Association(CLHIA)in Toronto released a package of initiatives that, it claims, will strengthen customer confidence. At the time the initiatives were released, CLHIA president Greg Traversy said, “Canada’s life and health insurers are moving proactively to reinforce transparency and customer information with initiatives that build on the strong foundations put in place over past decades.”

Included in the initiatives are increased consumer awareness through websites and access to a customer assistance center and a consumer code of ethics, product disclosure with product profiles being sent to consumers which conform to new standards, a regular compensation review and sales-related compensation practices review, disclosure of travel incentives and finally, disclosure of intermediaries distributing life and health insurance products.

Despite these initiatives, the CCIR is taking a wait-and-see attitude towards its review. It supports CLHIA’s process and encourages its desire for more transparency, notes Hall. But, he adds, there is no official position as far as the specifics of the initiatives are concerned. “At this stage, I can’t say whether it would meet any concerns that we may conclude, but we certainly support any moves that are taken to increase consumer confidence,” says Hall.


Federally legislated compassionate care benefits came into effect last month, allowing eligible employees to maintain income and job security while caring for a family member who is ill and in danger of dying.

So far, the Yukon Territory, Nunavut, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, P.E.I. and Nova Scotia have made changes to their Employment Standards laws. In some cases, the provincial legislation uses a definition of “family member” that is broader than the definition used in the federal law for Employment Insurance benefits.

The European Commission(EC)has sent a formal request to Sweden to amend its pension tax legislation. It said a proposal by the Swedish government to cut the yield tax rate from 27% to 15% for policies taken out with non- Swedish insurers did not go far enough.

The Commission considers the legislation an obstacle to the freedom to provide services and the free movement of capital guaranteed by the EC.

The main problem, according to the EC, is that pension contributions an employer makes on behalf of its employees to a foreign pension fund are not tax deductible—unlike contributions made to a domestic fund.

Demand from pension funds will be one of the factors behind European bonds outperforming this year, according to Merrill Lynch. The investment firm said positive fundamental trends in European economies and demand from pension funds would result in Euro bonds performing well.

Merrill also said companies in Europe have been “repairing” their balance sheets and have more cash to invest.

Joel Kranc