October 31, 2018 11:30
L’Association canadienne des compagnies d’assurances de personnes (CLHIA) congratulates the government of Saskatchewan have adopted a regulation aimed at dispelling any confusion that might imply that life insurance policies can be used as contracts of deposit or securities.
Published yesterday, the regulations limit the amount of premiums that a life insurer may accept as deposit in certain life insurance policies and in the related accounts.
The provincial government has taken the following measures after the three limited partnerships have sued two insurers in Saskatoon, stating that the sub accounts that they had purchased there was no upper limit to the size of the investment.
Guaranteed rates up to 5 %
Some of the secondary accounts in question, issued at a time when interest rates were higher, enabled the holders to invest with guaranteed rates of up to 5 %. Although this can be very profitable for the partnerships, this could also cause financial damage important to the insurers.
The companies that have established the fonts were acquired by theIndustrial Alliance, Insurance and financial services (financial Group iA) and by the Manulife Financial.
In a press release, Manulife said that consumers who bought universal life insurance policies and the companies issuing such policies ” never had the intent to make sure that these fonts work as contracts of deposit or securities “.
The accounts do not have any connection with the life insurance
According to Manulife, one of the partnerships, Mosten Investment LP, said that life insurers may be forced to accept premium payments unlimited. In fact, Mosten seeks to use insurance policies to invest considerable sums of money which have no connection with the insurance coverage. “
The CLHIA has intervened in the case, arguing that it raised important legal issues that raise important legal issues of concern to the canadian insurance sector of people. “We have acted during the dispute, which occurred in Saskatchewan, because the position adopted by Ituna Investment LP, Mosten Investment LP and Atwater Investment LP was going against the nature and purpose of the product, fundamental notions of the insurance law, as well as the regulatory system of the country,” said president and chief executive officer of the CPOMA, Stephen Frank.
“As the public policy question addressed by the regulation in Saskatchewan is relevant across Canada, the CLHIA plans to request the governments of the other provinces and territories to take regulatory measures comparable in order to avoid any uncertainty to the public “, said Mr. Frank.
iA financial Group has also supported the new regulation. “Given these new regulations from the Saskatchewan, iA financial Group believes that the substantive aspects of the dispute Ituna will be solved. iA financial Group fully supports the initiative of the CPOMA who asks that of other provincial and territorial governments to take similar measures to clarify the legislation and enhance the primary purpose of the sub-accounts in the insurance industry. “