Insurable Interest Canadian Insurance Blog

A National Association of Insurance Commissioners’ committee had the final word today on Actuarial Guideline 49, approving changes designed to tighten up indexed universal life illustrations. The executive committee and the plenary approved the newly named AG 49A with a lone No vote by New York. There were no comments accepted, but Jillian Froment, director of the Ohio Department of Insurance and chair of the NAIC Life Insurance and Annuities Committee, addressed two objections registered by consumer advocate Birny Birnbaum. Birnbaum pressed to include language banning illustration outcomes suggesting that the rate the policy will pay the policyholder is higher than the rate the policyholder will pay to borrow from the policy. Birnbaum, executive director of the Center for Economic Justice, said this “riskless arbitrage” is a dangerous trap for consumers. “This is analogous to taking out a mortgage on your home and using that money to invest in the stock market – because the market has averaged returns of, say, 8%, while your mortgage loan rate is 3%,” he said in a comment letter. “Of course this would be terrible financial advice because the loan cost is fixed – you have to pay the interest regardless of what your...

Staff | August 14, 2020 The Canada Pension Plan Investment Board posted a 5.6 per cent net return for its first 2021 fiscal quarter, which ended June 30, 2020. The quarter saw the CPPIB’s net assets grow to $434.4 billion from the $409.6 billion it held at the end of its 2020 fiscal year, which ended March 31, 2020. The increase came from $1.9 billion in CPP contributions and $22.9 billion in net investment income. By comparison, the CPPIB had a difficult finish to its 2020 fiscal year, which saw a return of just 3.1 per cent, dragged down by the coronavirus-related market turbulence. Notably, looking at the 2019 calendar year before the pandemic, the fund saw a 12.6 per cent return. Read: CPPIB posts 3.1% gains for fiscal 2020 after difficult final quarter “While global financial markets experienced a strong rebound from March, significant uncertainty in health, social and economic conditions persists,” said Mark Machin, president and chief executive officer of the CPPIB, in a press release. “Amid this environment, CPP Investments delivered solid performance, while our investment teams were active in creating long-term value across our diversified programs.” In particular, the release noted public equity markets bounced back into strong performance during the quarter, which...

Staff  | August 14, 2020 The Ontario Superior Court of Justice has issued additional reasons for judgment in a long-running unpaid overtime class action lawsuit against Canadian Imperial Bank of Commerce. The court has followed up on its summary judgment decision from March 30, 2020, ruling the bank’s current overtime policy is illegal and unenforceable and that frontline employees who are members of the class are entitled to monetary damages for CIBC’s failure to pay overtime. In the most recent decision, released on Aug. 10, Justice Edward Belobaba said CIBC’s overtime policy is illegal and that it breached employment contracts and the federal labour code. He concluded class members are entitled to damages arising out the bank’s breaches of the class members’ employment contracts. Read: Former Starbucks Canada employee suing for unpaid OT on behalf of store managers In rejecting the arguments of CIBC’s lawyers, Justice Belobaba noted CIBC, “in violation of federal law, failed to make and keep records of the ‘hours worked’” and that having “failed to keep the required records, the defendant bank now says that every aggrieved class member should be required to prove their case — and if it takes some 30,000 or more individual trials, so be it.” The court will now give CIBC the time to...

New Novarica brief details the benefits of journey mapping, common challenges to overcome, and best practices Boston, MA (Aug. 4, 2020) – Facing the transformational challenge to develop an “outside-in” perspective of the customer experience, insurers are looking at journey mapping to understand the sentiments, challenges, and frustrations of their customers. In a new executive brief, Customer Journey Mapping: Key Issues and Best Practices, research and advisory firm Novarica examines the reasons for journey mapping, the challenges to achieving success, and leading practices to developing journey maps. The brief also provides a breakdown of the common components of an effective journey map. “Journey maps are often one of the first steps that insurers will take to rally stakeholders around the customer experience,” said Paul Legutko, Vice President at Novarica and co-author of Novarica’s new report. “They can have a very long shelf-life as a result, with organizations revisiting and redeploying them in conjunction with other CX-related initiatives and capabilities.” Click here for the table of contents or to access the report. Report Summary Journey maps provide the guide and compass for engineering omni-channel experiences by identifying, visualizing, and describing each stakeholder touchpoint. One of the most significant innovation and transformational...

Yaelle Gang, the Canadian Investment Review | August 14, 2020 While many Canadians likely started the year worried about retirement savings as the markets were ravaged by the coronavirus fallout, some employers continued to introduce new savings offerings to help ensure their employees’ retirement security. In May 2020, the Kitchener-Waterloo Multicultural Centre officially joined the OPSEU Pension Trust’s OPTrust Select, offering its employees a defined benefit plan for the first time. Plan members and the employer will each contribute three per cent and members will receive a lifetime guaranteed benefit. Read: OPTrust Select welcomes first members The 53-year-old organization has grown to between 35 and 40 staff and a budget of about $2.5 million. “We were very reliant on our various levels of funders, but over the years we’ve also grown a fee-for-service aspect of the organization,” says Lucia Harrison, chief executive officer of the centre. “We provide interpretation services [at] very competitive not-for-profit rates, but it provides us with a revenue that we have more discretion on how that revenue is used.” The Kitchener-Waterloo Multicultural Centre had talked about pensions for years, she says. “We had people in doing presentations, encouraging people to invest in [registered retirement savings plans]. We just weren’t able to cover...

Martha Porado | August 14, 2020 Members of the Nunavut Employees Union are taking issue with the requirement they use vacation time to self-isolate if they visit other provinces. The territorial government put restrictions in place for travellers outside of Nunavut in March, which is when members began calling to alert their union, said Bill Fennell, president of the NEU, in an email to Benefits Canada.  “We are in an unprecedented situation and the NEU supported initial efforts by the GN to protect Nunavut from this global pandemic,” he said. “Quarantine is what has helped keep Nunavut — so far — free from any positive cases of COVID-19. We do not have an issue with quarantine, but the government has made exemptions to quarantine for casual and other workers coming into the territory . . . . Meanwhile, residents of Nunavut who are full-time employees are forced to use their vacation days for mandatory quarantine imposed by their government and employer. Read: Uber Black drivers fight for unionization at labour board hearing “Not everyone who works in Nunavut has family in the territory. Where possible, it would be great if everyone could take their vacation time here in Nunavut, but it’s a slap in the face to force full-time employees and residents...

Staff | August 14, 2020 A member of parliament from the New Democratic Party is introducing a motion to convert the Canada Emergency Response Benefit into a guaranteed livable basic income. The motion from Leah Gazan, the representative for Winnipeg Centre, is calling on the government to introduce legislation and work with provincial and territorial governments and Indigenous peoples to implement a guaranteed basic income for all Canadians over the age of 18, including single people, students, families, seniors, people with disabilities, temporary foreign workers, permanent residents and refugee claimants. Read: Could the pandemic prompt employment insurance reforms? It suggested the program account for regional differences in living costs, be paid on a regular basis and shouldn’t require Canadians to participate in the labour market, education or job training to be eligible. It should also be in addition to any future government services or income supports meant to meet “special, exceptional and other distinct needs and goals.” On Twitter, Gazan said a petition on her website to support the motion had garnered more than 5,000 signatures in 24 hours. While the CERB is due to end in early October, Prime Minister Justin Trudeau promised a plan is in the works to move Canadians who don’t qualify for employment insurance — such as...

The Canadian Press | August 14, 2020 Canada’s official fiscal watchdog says the federal wage subsidy program may cost $14 billion less than the government predicted. A new report by Parliamentary Budget Office analyst Ben Segel-Brown estimated subsidizing wages for companies during the COVID-19 pandemic will cost $67.9 billion through the end of December. Finance Minister Bill Morneau estimated in his July fiscal report it would cost $82.3 billion. Segel-Brown says that figure was prudent at the time because of economic uncertainty and ongoing work to update the program’s rules. Read: Federal wage subsidy to be extended to December, says Trudeau The wage subsidy program encourages employers to keep their workers on the payroll even as work slows because of the pandemic by offering to cover as much as 75 per cent of wages. It was initially just for three months, but it has since been extended until December and the amount of the subsidy now ranges from 10 per cent to 75 per cent, depending on how much a company’s revenues have dropped each month. The report also expects another $500 million in foregone payroll contributions such as employment insurance, but the costs are offset by an expected $9.1 billion in corporate taxes on the wage subsidy....

Jennifer Paterson | August 14, 2020 Company culture is a common term, but what does it actually mean? Though it’s one of those non-tangible concepts that can be difficult to put into words, company culture is generally recognized as an integral part of how employees view and value their employer and their workplaces — and that’s never been more true than in the current climate. There’s no doubt we’re all facing challenges as the coronavirus pandemic takes a toll on our professional and personal lives. But I’ve also noticed how difficult it is to instil and reinforce a team and a company culture when I don’t see my colleagues face to face every day. Emails and text messages can be misconstrued, tones misunderstood and, with all the added pressures, it can be difficult to actually realize that a colleague may have too much on their plate. Read: Employees favouring company culture, career progression over pay: survey I believe the way leaders recognize and approach these challenges is directly related to company culture. Company-wide town halls, weekly team check-ins and regular one-on-ones — even though they’re virtual — have never been more important. Whether formal or casual, these types of touchpoints can have a...

Benefits Canada  | August 14, 2020 As the global economy slogs through one of the most dire situations in living memory, some predict it will bounce right back to its old self, while others aren’t so sure. Janet Rabovsky, independent investment consultant With lockdown restrictions lifting, Canadians are wondering how quickly the economy may rebound. While none of us have a crystal ball, all signs point to a U- or W-shaped recovery. Recently, the International Monetary Fund forecasted global gross domestic product at almost negative five per cent for 2020, worse than its April forecast of negative three per cent. Canada’s outlook has also worsened, with 2020 GDP forecasted at negative 8.4 per cent , before rebounding to 4.9 per cent in 2021. It’s worth noting that GDP was already decelerating in 2019, ending the year at 1.6 per cent, in part due to declining export volumes in farming, fishing, oil and automotive-related industries. Read: What are the implications for pension funds coming out of coronavirus crisis? In July, the federal government’s economic update projected a deficit of more than $340 billion for the current fiscal year. Despite the government programs, May 2020 unemployment stood at 13.7 per cent. Many are calling...