Opening Remarks re Bill C-377 from the Canadian Life and Health Insurance AssociationRelease Date: 06/10/2013 Staff Reference: Ronald Sanderson
Thank you, Chair, and Honourable Senators.
We are pleased to share our views as you consider C-377.
The CLHIA is a voluntary association whose member companies account for over 99 per cent of Canada's life and health insurance business. The industry provides a wide range of financial security products to about 26 million Canadians.
Our principal concern with this Bill is privacy. As drafted, the Bill could make public the benefit payments we provide to individual Canadians. We already report required information for tax purposes, but that information is confidential. We believe that this Bill would be at odds with reasonable consumer expectations of privacy for their medical and financial affairs.
Other evidence, including from the Canadian Bar Association, also raises this concern.
CLHIA has made representations regarding this Bill to its sponsor and to the Commons' Standing Committee on Finance. We have focused on what we believe was a broader than intended scope, which would have required reporting of contributions to, and payments from, workplace employee benefit plans. We do not believe that the Bill was intended to make public information relating to reimbursement of costs for prescription drugs, or for a child's orthodontia, or similar benefits that arise because of employment and insurance relationships. But that is what the original Bill would have done.
As noted in the Privacy Commissioner's evidence, amendments in the Commons address these issues in part. Those changes may not remove all health benefit plans from the Bill's scope. Other amendments have created ambiguity, so some important drafting changes are still needed if the Bill is to proceed.
In particular, the Bill provides that "labour trusts" must report transactions involving an individual or entity where those transactions' total value exceeds $5,000.
Proposed subsection 149.01(1) defines "labour trust" to include "a fund… maintained… in part for the benefit of… labour organization… members."
"Fund" is not defined. Contracts, such as group term life insurance policies, are characterized as labour trusts, which seems unusual, since there is no "fund" specifically associated with such contracts. And as drafted, "fund" need not be exclusively intended or operated for members of a labour organization.
The Bar Association described impacts on Group Registered Retirement Savings Plans. But the problem is broader. For instance, if a member of a labour union were, independent of her union activities, to hold units of a mutual fund in a "retail" RRSP, then that fund would appear to constitute a labour trust under this Bill. It would appear that the mutual fund would be tainted, so that all other investors in the mutual fund - despite being unrelated to the union member, and having no union membership themselves - would find their personal financial transactions to be a matter of public record, searchable by anyone, anywhere.
Under proposed subsection 149.01(5), payments made "through a third party or contractor" would be reportable. Would health and dental benefits payable by an insurance company - acting as an insurer or as an agent of an employer - be publicly reportable?
Surely, these outcomes would not be acceptable as a matter of public policy, and are not what the Bill truly intends.
Proposed paragraph 149.01(6)(b) exempts certain single purpose labour trusts from public reporting if their activities relate exclusively to "administration, management or investments" under certain benefit plans. Such an exemption would not appear to be available to arrangements like retail mutual funds, and this seems unreasonable.
If this Bill is to proceed, we believe that "labour trust" is too broadly construed and should be narrowed. The Bill should focus on specific activities, rather than all activities undertaken by a too broadly-defined "labour trust".
On January 31st, we provided your Committee with recommended changes to the Bill's text, together with our rationales for those changes. I would be pleased to respond to any questions arising from those recommendations or more broadly.