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)

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. 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. 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

5. 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

6. Federations / Associations
New legislation forces decision
Once you are in, you are a full participant, hard to get out
The minimum 75% rule

7. 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

8. 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

9. 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

10. 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

11. 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

12. VI - Competition strategies adopted by mutuals
- We negotiate group agreements
- Services offered by central organizations
- Special projects
- Adopting the strategies of the competition