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Letter to Alberta's new Minister of Finance regarding premium taxes and long-term disabilty contracts


Release Date: 06/02/2015
Source: Stephen Frank
Staff Reference: Stephen Frank

June 2, 2015

The Honourable Joe Ceci
President of Treasury Board and Minister of Finance
#208 Legislature Building
10800 – 97 Avenue
Edmonton, AB T5K 2B6

Dear Minister Ceci:

Please accept the congratulations of the Canadian Life and Health Insurance Association (CLHIA) on your appointment as President of Treasury Board and Minister of Finance.

The CLHIA is a voluntary association whose member companies account for 99 per cent of Canada's life and health insurance business. There are currently five Alberta headquartered life and health insurers and collectively our industry employs over 12,700 individuals in the province. We offer a wide range of products and services to Albertans including individual and group life insurance, supplementary health insurance and individual and group annuities (including RRSPs, RRIFs, TFSAs and defined contribution pension plans. The industry provides almost $6.5 billion or about $124.1 million per week of benefit payments to Albertans and holds $71.1 billion worth of primarily longer term investments in the province.

We have regular dialogues with your officials on a wide range of fiscal and regulatory issues. One of the immediate issues of concern is the increase in insurance premium taxes proposed in your predecessor's March 26th budget. The proposal's April 2016 implementation date ensured there was adequate lead time to price the premium tax increase into the renewable premiums of short term contracts, like those of the property and casualty insurers. However, there is no similar opportunity on existing long-term life insurance contracts (spanning over 30, 40 or more years), with fixed price and benefits. Going forward, we believe it is important to have a more balanced approach to tackling changes to life insurance industry taxes that incorporates the realities of our product designs and the industry's already significant tax contributions to the Alberta Treasury.

Another issue of importance to our industry relates to the provision of long-term disability coverage and ensuring that this is only done through an insured contract. This is a critical to ensure that those on disability do not have their support cut-off in the event that their employer enters into financial bankruptcy. The Federal and Ontario governments have both passed legislation to ensure that this does not happen in the future, and we strongly believe that Alberta should also move in this direction.

We recognize that these reforms are complex and will take some time. I would welcome the opportunity to meet with you to discuss this very important issue for all Albertans and will follow-up with your office in the coming weeks to find a convenient time for us to meet.

Yours sincerely,

Original signed by

Frank Swedlove