Moments in Time (September 01, 2004)

Exchange Ready To Go?

By Robert H. Hilborn, Chairman of the Ontario Exchange Implementation Committee

March, 1985

In November, 1982, the Ontario Cabinet gave approval in principle to the establishment of an Insurance Exchange in Toronto and authorized a Committee to study the matter further…

To succeed a Canadian Insurance Exchange will require the enthusiastic support of the same sort of alliance of brokers, underwriters, buyers and governments that helped the New York Insurance Exchange overcome its obstacles and become such an outstanding success.

The Committee recognized the current difficulties in the marketplace, particularly with regard to overcapacity. On the other hand when the insurance industry enters another period when capacity is insufficient to meet our needs, one cannot suddenly put together a Canadian Insurance Exchange.

Farm Mutuals Close to Expanded Role

April, 1986

Consumer and Commercial Relations Minister Monte Kwinter has assured the Ontario farm mutual insurance companies that changes are on the way to broaden their operating base.

“The Minister said the required legislation will be introduced during the spring session,” said Robert Forsythe, past president of the Ontario Mutual Insurance Association, representing 51 farm mutuals. He was interviewed at the OMIA annual convention in Toronto.

Mr. Kwinter has agreed to expand the farm mutuals’ powers, something the companies have been seeking since 1982, as a possible source of new capacity in Ontario, still deep in an insurance availability crunch.

The changes would allow farm mutuals to own downstream subsidiaries to insure their non-farm business. Each subsidiary would be capitalized at $1-million. Policyholders would be protected against loss through a guarantee fund now operated by the mutuals. There is a combined surplus of more than $150-million.

As I See It: “The Sky is Falling”

By Fred G. Funston

April, 1987

The Ontario Superintendent of Insurance has been reported making speeches in the province, the gist of which is to tell his audiences that if the insurance industry does not pull up its collective socks, the government will nationalize automobile insurance.

This is just a few months after the Minister of Financial Institutions indicated he is changing the rules for farm mutuals to permit them to expand underwriting to create additional capacity in the automobile field.

Then, another newspaper describes the rift between the Ontario Government and Ottawa over who is going to control the distribution of the various financial products soon to be deregulated by both governments. Ontario is apparently so miffed at the Feds for suggesting the establishment of its international banking centres in Montreal and Vancouver and not in Toronto, it is taking no chances that Ottawa will foul up its plans for control of the distribution of financial products.

You begin to wonder if the sky is really falling. Here we have a Government doing its utmost to retain its hard won place as a leading financial centre battling the Feds on one hand and threatening to send property-casualty insurance companies packing.

Editorial Comment: “Reinsurance in the 1990s”

By Lawrence Welsh, Managing Editor

November, 1988

In this month’s feature article, Paul Graham, of Canadian Reinsurance Co., warns that in today’s changing market, reinsurers must be ready to innovate and adapt to a marketplace in constant evolution.

These are changing times for reinsurance. Gone are the days of the late 1970s when everyone and his brother opened a reinsurance company or department and people with little experience were writing exotic covers in parts of the world they little knew or understood.

By the early 1980s, the term long-tail losses had become a familiar phrase, as claims from casualty business written in the 1950s, 1960s and 1970s came home to roost. The new buzz words were asbestosis, U.S. casualty scares and the inadequate pricing of Canadian liability coverage. Many fly-by-night reinsurance companies and ones formed with little expertise flew off into the night.

Now, in the late 1980s, it appears the industry has paused to take a deep breath. Speaking at the recent Atlantic Alliance conference in St. John’s, Andre Fredette, vice-president, Mercantile and General Reinsurance Group, himself paused to look ahead into the 1990s.

Currently, he said, there is renewed concern for financial strength and continuity and greater use of actuarial certification of loss reserves spurred by government requests. The question of government auto insurance in Ontario still dangles. Also, the possibility of a major earthquake in a Canadian city gives reinsurers sleepless nights, since they would carry the heavy end of the loss.