Hon. DOUGLAS ABBOTT (Minister of Finance) moved the second reading of Bill No. 350, to amend the Canadian and British Insurance Companies Act, 1932, and the Foreign Insurance Companies Act, 1932.
He said: Mr. Speaker, perhaps a brief word of explanation of this bill should be made.
The first purpose of the bill is to enlarge the powers of Canadian, insurance companies to permit them to invest in mortgages in excess of the usual limit of 60 per cent of the appraised value, where the excess is guaranteed by the government of the province of Ontario under the authority of The Housing Development Ac't, 1948, passed at the la^t session of the Ontario legislature.
At the present time there is authority in The Canadian and British Insurance Companies Act, 1932, for making investment in so-called "excess" mortgages, but only in cases where the excess is insured by the federal housing administrator of the United States of America. The experience under this type of mortgage has been so good that it is considered justifiable to substitute a more general provision for the existing one. The new provision will enable tire companies to participate in the Ontario scheme, or any similar national, provincial or State schemes in countries where they are carrying on business, and in so doing to take advantage of sound investment opportunities.
The second purpose of it he bill is to enlarge to a limited extent the general investment powers of Canadian insurance companies. The steady increase in the funds 'to be invested by the companies has been accompanied by increasing difficulty in finding suitable investments within the prescribed classes. This problem has been the subject of discussion between representatives of the companies and officials of the department of insurance from time to time, but more extensively during the last few months. While the principle of restricting the investments of insurance companies to specified classes is unquestionably desirable, nevertheless new types of sound investments not within the prescribed classes are continually
coming into existence, very often in limited amounts, and frequently the best of them are available for only a short time before being taken up by other investors-sometimes by British and foreign insurance companies possessing wider investment powers. This situation 'has pointed to the desirability of granting to Canadian insurance companies a small degree of freedom in their investment powers, subject always to certain general prohibitions and restrictions, and the effect of subsection 3 of section 1 of the bill is to permit relative freedom up to a limit of three per cent of a company's total assets.
When it is remembered that British insurance companies have practically one hundred per cent freedom, and that their record stands as an example to the insurance world, the proposed limit of three per cent for Canadian companies appears to be reasonable and justifiable. Another consideration pointing to a provision of this kind is that the merits of different investments within a particular class vary greatly, and while some of them may undoubtedly be first grade, it might be unsatisfactory in some cases to authorize specifically that particular class as a whole. In addition, it is becoming more difficult to prescribe satisfactory tests for certain desirable investments.
The record of Canadian insurance company management is such as to merit confidence that the additional powers here conferred will be exercised in the best interests of the policyholders. It is a minor change in the investment powers. I would not undertake to make any substantial change without a great deal more study on the part of the department of insurance to the whole question of insurance companies' investment power.
Motion agreed to. bill read the second time, and the house went into committee thereon, Mr. Macdonald (Brantford City) in the chair.
On section l1-Guaranteed or insured real estate mortgages.
Mr.FRASER: Will this help insurance companies to make it possible for housing to be increased throughout Ontario?