McCRANEY (Saskatoon! moved:

That the first report of the Select Standii Committee on Standing Orders, presented c tne 5tn inst., be now concurred in.

He said: On Friday last when this report was presented, the hon. leader of the opposition made some inquiry as to whether any undertaking would be required from the promoters of the Bill. I have received from the clerk of the Committee on Standing Orders the following memorandum:

?ouse might be informed that the clerk of the Railway Committee, in the case of special reports being made by the Select Standing Committee on Standing Orders in connection with notices found defective, usually directs the attention of the chairman of the former committee, and I presume the same course will be followed in the present case when the Bill comes up for consideration.

Mr. R. L. BORDEN.

The memorandum contains some information which is of value, but I would not be inclined to re-Mr. LENNOX.

Mr. SPEAKER.

I have the honour to inform the House that the Clerk of the House has received from the Clerk of the Crown in Chancery a certificate of the election and return of Frederick Tennyson Congdon, Esq., for the electoral district of the Yukon territory. i

FIELDING (Minister of Finance) moved for leave to introduce Bill (No. 97) respecting Insurance. He said: Mr., Speaker: This Bill is to a very large extent the Bill which was presented to the House last session and held over for further consideration. It is not, however, the same in all respects. The Bill of last year was the subject of a protracted hearing and inquiry before the committee on Banking and Commerce, during which many suggestions were offered by way of amendment. We have had the benefit of that inquiry, and the benefit of the further study which has been had of the Bill in consequence of the delay; and with the better light which has come to us we have endeavoured to make some improvements in the Bill. I shall call the attention of the House to the points in which, the Bill differs materially from that of last year. We do not make any change in the existing law with respect to the assessment insurance companies. A proposal in relation to these institutions was made in the Bill of last year; but even if we had gone on with that Bill, that proposal, as was stated; at the time, would have been withdrawn.

The principal companies engaged in that line of business represented to us that they recognized the necessity for strengthening their position, that they were going about it in their own way and desired to be left to themselves for that purpose. We are aware that efforts are being made in that direction and so we do not propose in this Bill to make any change in the existing law with respect to these organizations. Probably the question of investments is the one which engaged the most attention before the committee last year We have made some changes with respect to the provisions on that subject to which I shall invite the attention of the House. Section 60 of the new Bill will read:

Any life insurance company which derives its corporate powers, or any of them, from an Act of the parliament of Canada, or which is within the legislative power of the parliament of Canada, may invest its funds, or any portion thereof, in the purchase of-

(a) The debentures, bonds, stocks, or other securities of or guaranteed by the government of the Dominion of Canada, or of or guaranteed by the government of the United Kingdom, or of any colony or dependency thereof, or of or guaranteed by the government of any foreign country, or state forming a portion of such foreign country, wherein the company carries on or is about to carry on business, provided the Treasury Board has signified its approval of such securities, or of any municipal or school corporation in Canada, or elsewhere where the company is carrying on business.

That is substantially the same as in the Bill of last year.

Subsection (b) 1 includes among the securities in which a company may invest

The bonds of any company which bonds are secured by a mortgage to trustees or a trust corporation, or otherwise, upon real estate or other assets of such company.

The former Bill required that these bonds should be outstanding for at least five years. In the present Bill we have dropped the time condition; if the bonds are secured by mortgage they are deemed to be good and may be used as a field for investment. The former Bill restricted these bonds to the bonds of a corporation incorporated in a country in which the insurance company v as carrying on business. We have, after the discussion which has taken place, removed that restriction. Subsection 2 of subsection (b) reads:

The debentures or other evidences of indebtedness of any Company, which has been doing business for a term of not less than five years prior to the date of such investments, provided default shall not have been made by such company in the interest payments upon its debentures or other evidences of indebtedness within the said period of five years prior to such investment.

In the former Bill it was required that such debentures should be of seven years' standing. In the present Bill we apply the time limit not to the debentures but to the standing of the company which issues the debentures. If a company is of five years' standing and has made no default it is presumed that its debentures may be treated as good.

Subsection 3 of subsection (b) reads:

The preferred or guaranteed stocks of any company which has paid regular dividends upon such stocks or upon its common stocks for not less than five years preceding the purchase of such preferred or guaranteed stocks.

Last year's Bill provided that such stocks should have paid 4 per cent for seven years. The present year drops the 4 per cent condition and provides that the company shall have paid regular dividends for five years on this class of stock but does not specify the rate. The argument is that this is a high class of stock which may in some instances not pay as much as 4 per cent, and that it is not wise to insist upon the 4 per cent rate.

Subsection 4 of subsection (b) reads:

The common stocks of any such company upon which regular dividends of at least 4 per cent have been paid for the seven years next preceding the purchase of such stocks: Provided that not more than 20 per cent of the common stocks and not more than 20 per cent of the total issue of the stocks of any company shall be purchased by any such life insurance company, and that no company shall be permitted to invest in its own shares

or in the shares of another life insurance company.

Last year's Bill provided that the common stock should have paid at least five per cent dividends for ten years. The present Bill recognizes the stock as good if it has paid four per cent for seven years.

There is a proviso here as to the percentage of money which may be invested in the securities of any one company. The object of that was to provide that the company should not create a subsidiary company and obtain a controlling interest in it. It was found, however, that the words of the clause seemed to be too broad, and we have now amended it. Last year's Bill limited the investment to twenty per cent of all the stocks or securities of the company. In the present Bill we are distinguishing between the stocks and bonds and our proviso is that the investment may not exceed twenty per cent of the sto'cks of any company, but we leave the company free to invest in the bonds if they are deemed to be good security.

Subsections (c) and (d) of this clause recognize ground rents or mortgages on real estate, and life and endowment policies as proper subjects for investment, but these are not changes and it is not necessary to say anything concerning them.

A question arose as to what action should be taken respecting any investments of a company in securities which might not come within the new law. Provision was made that in the case of securities not recognized by the new Bill the securities should be disposed of within a certain time. We have changed that to provide that where the investments were made in securities which at the time of their purchase were legal and proper the company shall be free to dispose of them at such time as it may find most convenient. In the case of securities which, at the time of their purchase were not strictly within the terms of the old Insurance Act-this applies in one or two instances-provision is made that such securities shall be disposed of within a period of five years.

A question which has received great attention in the discussion of insurance matters is the expenses of management. In the last Bill provision was made for a limitation of the expense on new business, and at one stage it seemed that such a rovision was called for, if not by what ad occurred in Canada by the developments in other countries. In the investigations abroad great importance was attached to this question but when it came to be discussed with insurance men here before the committee it was urged that it would be exceedingly difficult to apply a limitation of that kind without interfering with the volume of insurance. It was held that the proposed limitation would so hamper the insurance agents that they

Mr. FIELDING.

would not be able to make a respectable income and would not enter the field, so that there would be a falling off in the amount of insurance, which is not desirable, because we all feel that the encouragement of life insurance is a good thing. We have inserted a provision in the present Bill not to put any limitation on the expense of new business particularly but to provide a limitation upon the expenses generally. If this proviso were not qualified, it might prove a great handicap to new companies. The expenses of management of a new company are necessarily greater in proportion than the expenses of an old company with a large volume of business, so we propose that the limitation of expenses shall apply to old companies which have a standing of fifteen years, or to any company so soon as it comes to the age of fifteen years, and that in the case of new companies to be incorporated hereafter, this limitation shall begin when they have had ten years of existence. Last year's Bill required that the returns should show the expense of new business separate from ordinary business. Such a division has been found difficult and we have dropped this provision and substituted one providing for a return of what is technically called a gain and loss exhibit which it is thought might to some extent serve the same purpose. Last year's Bill proposed that each class of insurance should be dealt with in a separate policy.

This year's Bill continues that provision, with, however, this qualification,-that accident and sickness insurance may be deemed as practically one, and these two may be included in one policy.

There is a provision with regard to what I may call the exchange of securities; that is to say where a company is required by the terms of the proposed legislation to dispose of securities within a given time, it may be found convenient that they should exchange these securities for some others which, while not coming within the class approved by the Bill, would still be desirable securities and of a better class than those now held by the company. The conditions are somewhat exceptional, and we think it well to make a provision which will meet those conditions.

There is a provision that no life insurance company shall loan any of its funds to any director, shareholder, officer or clerk thereof. That should not be held to interfere with the ordinary loan to any policy-holder who is entitled to receive it, merely because he is an officer of the company. Possibly this clause needs to be made a little clearer on that point.

With regard to the election of directors by the shareholders and the policy-holders, some of the companies now provide for policy-holders' directors. It is proposed that there shall be a general law in that

respect, and that all life insurance companies, shall provide for their policy-holders, as well as for their shareholders, having directors. It was represented to us before the committee that a few people might possibly acquire the power of directors and bring about hasty, radical changes in the management, a thing that certainly would not be desirable. To guard against this, it is proposed to provide that a certain number shall retire annually, so that there shall not be, at any time, a radical change in the directorate.

Mr. R. L. BORDEN.

What is the proportion of policy-holders' directors?

Mr. FIELDING.

The same number of each; policy-holders and shareholders have an equal number of directors, and two of each class retire every year. In the Bill of last year it was provided that proxies should be recognized. This is continued, with the proviso that proxies shall not be good for more than three months.

Mr. HENDERSON.

Will a shareholder be eligible as a policy-holders' director?

Mr. FIELDING.

No, every director must he chosen from his own class.

Mr. HENDERSON.

But a shareholder may be also a policy-holder. What I desire to ask is whether a shareholder will be eligible as a policy-holders' director? No shareholder should be eligible for that position.

Mr. FIELDING.

That is the provision of the Bill. Provision is made that a company may withdraw itself from Dominion jurisdiction. A case has arisen recently of a company that has a Dominion license, but wishes to confine its business to one province only, and so desires to withdraw its Dominion deposit and have it transferred to the Insurance Department of the province. There seems to be no objection to such a procedure, but we have no machinery in the Insurance Act to deal with it, and we propose to insert a clause granting that power.

Now, a question that was brought to the notice of the committee last year is that of publicity. It was urged by the representatives of the companies that some of the restrictions proposed to be placed upon them were not necessary, but that the best guarantee the public could have was adequate publicity. One of the features we inserted in the Bill was that the returns should show the sums received by any officer or agent of the company in excess of a moderate amount-that is, in excess of $4,000. It was presumed that the ordinary life insurance agent, the great bulk of them, would receive less than that amount, and that, though a limited number might receive a larger sum, there would not be any

trouble in providing a return .of that character. It is but fair to say that we were not aware of any serious difficulty having occurred in Canada in relation to that point, though it is well known that one of the abuses shown up in the investigation in the United States was that very large sums were paid to officers of the company. Our contention is that if any such large sum be paid for good and sufficient reason, the public should be made aware of the fact through the return. It was, however, pointed out to us that such a return, when made public, might be misleading, inasmuch as many of the insurance agents have to pay their subagents, and therefore the amounts that might be placed opposite their names would not represent their own earnings, but only money that had passed through their hands. We continue the clause in the Bill, with the proviso, however, that, wherever the agent referred to us in receipt of money which he has in part to pay to subagents, that shall be indicated by a remark in the return, so that those who read will be made aware that the amount received by the agent is not entirely for himself.

A change is made in the tables used for the valuation of policies. The table in use for many years was what is known as the Hm. table of the Institute of Actuaries of Great Britain. A more modern table is the British Offices Life Table which has come into more general use. It is proposed to adopt this table.

We have added another part to the Bill, part 5, for the purpose of including in the Act a number of the clauses which are to he found in the Companies' Clauses Act, which, as hon. members who have had experience in the Banking and Commerce Committee know, are frequently referred to, a common provision in a private Bill being that such and such clauses of the Companies' Clauses Act shall apply and others shall not apply. That is often confusing. We propose to import into this Bill all the clauses of the Companies' Clauses^ Act that are useful for the purposes of insurance companies. We have added a form of model Bill, which it is hoped will be adopted, and will facilitiate the insurance legislation of the future. So many things have been carried into the charters of companies that sometimes they become embarrassing. We have thought it best that everything should be gathered into one Bill, and then a company's charter should be, as bank charters are, a simple measure.

The Bill is a somewhat lengthy one, com-pi ising, including the schedule, 94 pages. It is to be remembered, however, that it is not quite so ponderous as it seems, for the bulk of it is merely a consolidation of the existing law.

I propose, at an early day, after the Bill is in the hands of hon. members-as it will

be immediately-to move the second reading and ask that the Bill be referred to the Committee on Banking and Commerce. It has been suggested by an hon. member who is much interested in this measure, that we could effectively deal with it by 'appointing a small sub-committee of the Banking and Commerce Committee to consider it. That ccmmends itself to my judgment, but the motion for that purpose would have to be made in the Committee on Banking and C< mmerce itself.

AYLESWORTH (Minister of Justice) moved for leave to introduce Bill (No. 98) to amend the Exchequer Court Act. He said: The purpose of this Bill is simply to make the Civil Service Amendment Act, which was passed last session, apply to the registrar of the Exchequer Court. It is probable that such was the intention when the Act of last session was passed. The status and the salary of the registrar are fixed by special Act, and his position not being mentioned specially in the Act amending the Civil Service Act the special Act would still continue to apply to him, unless we pass legislation of the character I am introducing.