Can mutual insurance evolve in the mainstream? By CAMIC, Canada


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This presentation was delivered by Mr Normand Lafreniere (President at CAMIC, Canada) at the ICMIF-AOA Development Network Seminar (18-20 September 2013; Manila, The Philippines)

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Can mutual insurance evolve in the mainstream? By CAMIC, Canada

  1. 1. THE ICMIF-AOA DEVELOPMENT NETWORK SEMINAR “IMPROVING ACCESS TO INSURANCE” Presentation by Normand Lafreniere President of the Canadian Association of Mutual Insurance Companies (CAMIC) Thursday September 19, 2013
  2. 2. I - HOW HAVE MUTUALS EVOLVED IN DEVELOPED COUNTRIES? Prior to 1835 - Low penetration rate of insurance 1835 – early 1900’s - Enabling legislation - Premium - Contracts 1900- 1950 - Premium - Contracts 1950 – to date - Premium - Contracts - Reinsurance - Others
  3. 3. Set-up of a Guarantee Fund - Each mutual must be a member of a Guarantee Fund - Obligation for the Associations/Federations to maintain the Guarantee Fund - Reserve of capital to meet obligations if a mutual is in financial difficulty - Reduces the requirement for capital for each of mutual - Regular analysis of the Guarantee Fund and regular analysis of each participating mutual
  4. 4. Mutual Reinsurance Plan/Company - Pool of risks (Reinsurance Plan) – Reinsurance Company - Difficulty to find reinsurance - Reduces risks - Underwriting capacity - Maintain more risk - Makes the Mutual results less Volatile - Increases the negotiating power of the Mutual Group - Brings the Group to act in a coordinated way
  5. 5. Federations / Associations New legislation forces decision Once you are in, you are a full participant, hard to get out The minimum 75% rule
  6. 6. II – WHAT PROVIDES MUTUALS THE EDGE – LESSONS FROM THE AFTERMATH OF THE GLOBAL FINANCIAL CRISIS? No edge over stock insurers; The Canadian financial sector has acted responsibly throughout the whole period
  7. 7. III – HOW ARE THEY MAINTAINING THEIR MUTUALITY AND THE CHALLENGES? Mutuality - member-controlled organizations - supportive of their communities - pay claims even in “grey” areas - Adopt only fair underwriting rules - provide a “friendly yet efficient” environment to do business - risks that stock insurers would not cover - no pulling back from markets - provide clearly worded insurance policies - provide premium refund
  8. 8. III – HOW ARE THEY MAINTAINING THEIR MUTUALITY AND CHALLENGES? Challenges - Operating Cost - Delivery Methods - The age of our insureds - New dynamic web sites - Penetration of large centres
  9. 9. IV - WHAT HAS BEEN THE REGULATORY APPROACH TO MUTUALS? Incorporated at the federal or provincial level. Federal regulator : solvency Provincial regulator : solvency market conduct availability of insurance Provincial regulators: friends of mutual insurers
  10. 10. V - Do mutuals need to demutualize? - Surplus earned by many generations - Each generation left with nothing - Surplus for future generations + solvency of organization - Surplus is owned by the community/collectivity - Insured controls the organization, does not owned the surplus - We are proponent of the French model
  11. 11. VI - Competition strategies adopted by mutuals - We negotiate group agreements - Services offered by central organizations - Special projects - Adopting the strategies of the competition