Canadian Life and Health Insurance Facts, 2014 Edition

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Page 28 of 39

27 T he protection of policyholders and consumers is a prime concern of both the Canadian life and health insurance industry and government regulators. Consumer protection The mission of Assuris is to protect policyholders if their life insurance company should fail. Assuris works in partnership with regulators to identify potentially troubled companies at an early stage in the interests of minimizing disruption to policyholders in the event of a failure of a life insurance company. Assuris is the not-for-profit organization established and funded by the Canadian life and health insurance industry, and governed by an independent Board of Directors. All life insurance companies authorized to sell insurance policies in Canada are required, by the federal, provincial and territorial regulators, to become a member of Assuris. Assuris reviews and updates its protection to respond to changes in the market and the industry (see table below for Protection Highlights). Comprehensive details of benefits protected by Assuris and a list of members can be found on its website ( Government regulation From the earliest days following Confederation, Canadian governments have supervised the insurance business in Canada to ensure that commitments to policyholders are met. Most life and health insurance companies in Canada are regulated for solvency by the federal government, through the Office of the Superintendent of Financial Institutions (OSFI). The Autorité des marchés financiers (AMF) performs the same function for companies incorporated in Quebec. Regulators make regular inspections of insurance companies to ensure, for example, that actuarial liabilities are adequate to cover claims. Companies must submit annual returns to the regulators showing assets, liabilities, receipts, disbursements and other financial data. In order to conduct business in a province, insurers must obtain a licence from that province. Further, provincial governments regulate the licensing and conduct of agents, contractual matters, and other issues relating to consumer protection. As well, industry guidelines developed by the CLHIA and its member companies describe practices for insurers, including those for providing disclosure to consumers. Consumer Protection/ Government Regulation Protection Highlights Assuris guarantees that policyholders will retain at least 85 per cent of their promised benefits under a variety of products issued by life insurance companies in Canada. When benefits are below certain dollar values, Assuris provides 100 per cent protection: • Monthly income of $2,000 • Health expense of $60,000 • Death benefits of $200,000 • Cash values of $60,000 The protected amount of these benefits is determined as the greater of either 85 per cent of the guaranteed benefits or 100 per cent when the total benefits are less than the dollar value listed above. For deposit type products, Assuris guarantees that policyholders will retain 100 per cent of the Accumulated Value up to $100,000. This applies to the values of accumulation annuities, universal life overflow accounts and dividend deposit accounts. The 85 per cent protection does not apply to accumulated values. Assuris provides separate protection for individual, group, registered and non- registered benefits. Assuris also provides separate protection for individual Tax- Free Savings Accounts and group Tax-Free Savings Accounts invested in accumulation annuities. ❖ Assuris administers the industry Consumer Protection Plan, which protects Canadian life and health insurance policyholders if their life insurance company should fail. ❖ Life and health insurance is regulated by both federal and provincial governments to ensure that contractual commitments to policyholders are met. ❖ Insurance companies and their representatives are subject to guidelines on consumer disclosure and insurance practices.

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