April 17, 1905

LIB

Alan Joseph Adamson

Liberal

Mr. ADAMSON.

I agree, to a great extent, with what the hon. gentleman has said, but what I object to is that we should pass an amendment which will make an exception of one insurance company and apply to it alone, and which is not going to rectify the situation my hon. friend represents as likely to arise. You are making a special mark of this company, which has not yet commenced business. I would be very glad indeed if parliament thought it necesary to make an alteration in the Insurance Act which would apply to all companies, so that we would be exactly on the same level as the others, but what I object to is having a special amendment made applicable to this company. We are quite willing that the policy-holders should have the protection suggested, but is it right that they should be excluded from choosing a class of men who might be very useful ? if. however, there was an amendment to the General Insurance Act to that effect we would not object. But suppose you were to make the amendment in this solitary instance, you would still have the powerful companies, which have these immense funds to dispose of, unrestricted. I do not think anybody is suffering in Canada from the lack of any amendment of this kind, and I might point out that although these large sums at the disposal of insurance companies do not belong to the shareholders but to the policy-holders, the same condition exists in banks, and one might as well say that the depositors in a bank should be represented on the directorate.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

The depositors can draw out their funds at once. That is the difference.

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LIB
CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

But only at a great sacrifice. Has the Minister of Finance given any consideration to a general provision such as has been suggested ?

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

I think there is something to be said in favour of such a measure being passed as a matter of general policy. The moment you come to that, there is the question of vested rights- though, of course, the hon. member for Hal-ton (Mr. Henderson) said there could be no vested rights in the case of this company. At the same time, it would seem to me an inequality to impose such a condition on one company while others were Mr. R. L. BORDEN.

free from it. There is much to be said on both sides. On the whole I was disposed to stand by the report of the committee, making this company the same as others. If such a difficulty as is suggested by the hon. leader of the opposition (Mr. R. L. Borden), the hon. member for Hamilton (Mr. Barker) and the hon. member for Halton (Mr. Henderson) arise, I am inclined to think it would be necessary to deal with it by general Act. Until recent years we have not attempted to introduce this element in our legislation. Of course, it may be necessary, later on, to deal with the matter by a general Act. I am not prepared, at the present moment, to say that we will adopt it, because the other companies interested will naturally expect to be heard from before any action is taken. There is a good deal in the criticism which has been made that, even though you give the policy-holders the right which is proposed, it practically does not amount to much. I have consented in common with the majority of the committee

I know that my hon. friend from Halton (Mr. Henderson) dissented-that the same privileges should be granted to this company as to others.

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CON

Albert Edward Kemp

Conservative (1867-1942)

Mr. KEMP.

From what the Minister of Finance (Mr. Fielding) says I take it that there is not much hope of general legislation of this kind at an early date.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

Not at present.

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CON
CON

David Henderson

Conservative (1867-1942)

Mr. HENDERSON.

I have only a few words to say in reply to the argument of the hon. member for Kootenay (Mr. Galli-her) and the promoter of the Bill (Mr. Adamson). The hon. member for Kootenay contends that the promoters of this Bill have not asked for this amendment. Now. I do not think we are here simply to legislate for the promoters of companies. I think we have been doing that long enough and that it is time we began to do something for the people. If we frame our legislation in every instance to protect the corporations regardless of the interest of the people we are not doing our duty. That applies to life insurance companies as well as to other companies.

149}

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LIB

William Alfred Galliher

Liberal

Mr. GALLIIIER.

I hope the hon. member (Mr. Henderson) does not draw that conclusion from the remarks I made.

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CON

David Henderson

Conservative (1867-1942)

Mr. HENDERSON.

If I have drawn a wrong conclusion, I am ready to apologize to the hon. member (Mr. Galliher). But the reason he advanced for not supporting the amendment was that the promoters had not asked for this legislation.

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LIB

William Alfred Galliher

Liberal

Mr. GALLIHER.

My chief reason was, as I said before, that, while the promoters were willing to accept the restriction put upon the Canada Life, it was here proposed to put a further restriction upon them, and that they ought not to be trammelled with that restriction.

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CON

David Henderson

Conservative (1867-1942)

Mr. HENDERSON.

As to the restriction in the case of the Canada Life, my impression is that this Bill came before the committee with that restriction in it. As I remember the Bill as introduced, gave the policy-holders six directors.

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LIB
CON

David Henderson

Conservative (1867-1942)

Mr. HENDERSON.

That is, the policyholders were to have six directors and the shareholders nine. We propose that the six directors given to the policy-holders should be given and not held back while being nominally given. The company was only making a pretense of giving, because these six directors could he elected from the shareholders like the others. There was nothing in it for the policy-holders, and yet it seemed a very popular move. If I were a life insurance agent I would not want anything better with which to go to the public than to be able to say to the person whom I was soliciting for life insurance: Why,

there will be six policy-holders on this board and your interests will be protected. It would be a very popular feature of this company and I have no hesitation in saying that with that clause I would get $5,000 insurance where 1 would otherwise not be able to get more than $2,000, and yet the statement would be a fraud, as the hon. member for Hamilton says, because whilst it would appear on the face of the charter that the policy-holders could elect six directors, we know very well that the shareholders would not allow" them to elect those six directors. I have had a good deal of experience in life insurance business during the past 30 years; I have solicited a very large amount of insurance, and I say without hesitation that the company will be the gainer if they have this amendment in the Bill; they will be so many years ahead of all other companies doing business inOanada, they will have something to go to the people with which no other company in Canada has, something they can boast of and put in their literature, something they can hold up as a reality, whereas it is now simply a promise in which there is nothing. I again say that the promoter of the company is making a mistake in oppos-

ing the amendment l have suggested. The hon. member for Toronto has referred to one notable case, the case, I think, of the Equitable Company in New York, where practically one family holding stock to the amount of $100,000 controls about $5,000,000 or more worth of assets. What security is there to the policy-holder under such conditions ? No security whatever. In the Canada Life the policy-holders own 30 times the amount of assets owned by the shareholders; while the shareholders have a million the policy-holders practically have twenty-eight, twenty-nine or thirty million dollars. Why should those whose money is in the business not have some say as to how the business should be carried on ? It is a most extraordinary procedure, but I do not think I shall have to stand up this year, next year or the year after to advocate this matter which I advocated very strongly last year, because the time is coming when it will be forced upon the government and parliament to protect the policyholders in insurance companies by giving them a controlling interest in the management of the funds of the business in which they have invested their money. The hon. gentleman says that a bank depositor does not demand representation on the board of the bank. A depositor can at any time withdraw his entire deposit, but if a man has gone into an insurance company, say at the age of 25 and is now 55 years of age, so that he is not again insurable, he is unable to withdraw from the company and he must submit to whatever' conditions the company may impose on him whether right or wrong and it is a most serious matter to him and to those dependent on him. My hon. friend from Hamilton referred to some matters personal to himself as to the treatment received from an insurance company.

I have in my desk four or five statements of policy-holders with reference to the treatment of assured in what I regard as perhaps the strongest and best company in Canada so far as financial strength is concerned. I hold in my hand a statement sent out to a policy-holder insured for $5,000, an hon. gentleman who was at one time a member of this House, and who is at the present time a judge on the bench. In 1882 he insured his life for $5,000. For a certain number of years he received profits accruing to that policy and then these profits stopped. Why? Not because the company was not earning profits. His statement is that they sent him a statement on the 30th of December, 1904, showing that his policy instead of being worth $5,000 was of the face value of $4,812.50. How much will come off that next year I do not know. Why is that done? Simply because the directors' of that company take the money that lias accrued to him and to myself and to many others as profits and apply it to their own capital account.

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CON
LIB
CON

David Henderson

Conservative (1867-1942)

Mr. HENDERSON.

I am quite free to state what company it is ; I am sorry to say it is the Canada Life Assurance Company, and there are several members in this House who know it, who know that they have not been receiving their rights, that their privileges have been withheld from them and that no satisfactory explanation has been given as to why they have been withheld. I have one letter from a gentleman in Montreal holding a policy of $5,000 who says that he is practically compelled to sell his policy and get whatever he can for it because he has been depending on the profits to a certain extent to pay his premiums. The time has come when parliament must speak and I hope the government will look into this matter with the greatest care and will protect the interests of the people. We are not here simply to protect the interests of the corporations. We have our duty and I think the assuring public to-day is" looking to us for assistance. I hope and trust we will not be backward in giving them that strength, but if the Minister of Finance will tell me now that he will give this matter his best consideration with a view to bringing down general legislation that will meet the case which I realize is a cause of very considerable hardship in the country at the present time, I have no desire to press this amendment. I do not know what the feeling of the House may be, and I do not desire the amendment to be defeated because the principle is right and as the Minister of Finance has already told us, if I understand him aright, that he is prepared to give his consideration to this question with a view to making general legislation.

I would ask the privilege of withdrawing the amendment.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

I stated in answer to the hon. member for Halton that I was not prepared to give that assurance at once. All I can say as to the matter to which the attention of the public has been drawn in the Committee on Banking and Commerce, and also in this House, is that it is well worthy of consideration. To that extent I will promise my hon. friend not to neglect it. At the same time I would like to be quite free in any action I take. The view I take myself, while sympathizing with those whose case has been stated, is that we give this company the same privilege in regard to the election of directors as we give to the Canada Life. We give the policy-holder an absolute choice; if he fails to exercise that choice he cannot blame us. Still, if experience shews that that system has produced evils, then I think it should be dealt with by some general legislation. It is only right to say that while the Canada Life had that privilege extended to its policy-holders five or six years ago, up to this amount, so far

as the Insurance Department is concerned, we have never had any representation hut that that system was working satisfactorily. If it turns out that it is not working satisfactorily, and the policy-holders com-plain, as complaint has been made to-night apparently by two of them, then the matter might have to be dealt with by general legislation.

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CON

David Henderson

Conservative (1867-1942)

Mr. HENDERSON.

I would be very glad, indeed, to hand in five complaints to-morrow if it would have any effect, and I have no doubt that I could get 500 inside of five weeks. But as the minister has been frank enough to say that this matter shall receive the consideration of the government, and knowing that it is a provision that I can scarcely expect to amend without the consent of the government, I would ask to withdraw tile motion.

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April 17, 1905