The Participants

• Author: Denis Boivin
• Pages: 5-26

A. INTRODUCTION

Who are the key players in the Canadian insurance industry and what

are their motives for participating in this industry? Since insurance is

a product, it has both providers and consumers. The former are usual-

ly in the business of making profits and can collectively be described

as “insurers.” The latter are in search of peace of mind and are willing

to make considerable sacrifices to secure it; they are usually described

as “insureds.” The relationship between providers and consumers of

insurance is facilitated by a number of middlemen and women known

as intermediaries. These include agents, brokers, underwriters, and

adjusters. For intermediaries, insurance is a way of making a living; for

many, it is a recognized profession. In the sections that follow, each par-

ticipant is described in greater detail.

B. INSURANCE PROVIDERS

Insurance is a commodity, but it cannot be provided by just anyone.

For reasons discussed in Chapter 3, the supply of insurance is heavily

regulated in Canada. Generally speaking, there are two types of insur-

ance providers in the Canadian industry: public and private. Technical-

ly, there are also “self-insurers.” For instance, some corporations, such

5

THE PARTICIPANTS

chapter 1

as municipalities, have large and widespread operations. In certain

areas of their exposure, they can set money aside to meet future obli-

gations as they arise. This money corresponds to the premium that

they would otherwise pay to an insurer. In effect, these corporations

are insuring themselves by internalizing risks, rather than transferring

them to someone else. Because self-insurers deal exclusively with

themselves, they are not subject to the regulations described in this

book. As far as the law of insurance is concerned, self-insurers are in

the same position as people who save their money for a “rainy day”;

they personally accept the risk that their future obligations may exceed

the savings they have accumulated.

1) Public Insurers

a) Introduction

Public insurers are creatures of the State and are found at the federal,

provincial, and territorial levels of government. They assume many dif-

ferent forms, including government ministries and departments, boards,

and Crown corporations. Public insurers represent the interests of the

governments that establish them, administering insurance schemes cre-

ated by those governments. They are generally funded through a mix-

ture of tax dollars, premiums, levies, and user fees. They typically have

a monopoly in their respective spheres of activity, although limited com-

petition may be permitted in certain circumstances. Thus, they have a

relatively stable clientele. In fact, the purchase of their products is gen-

erally mandatory. Consumers have little choice but to pay for the serv-

ices they provide. Like all government bureaucracies, public insurers

are motivated by something besides profit. They are ultimately account-

able to the electorate, but their immediate supervisors are the minister

under whose jurisdiction they fall and the level of government respon-

sible for their inception. Simply put, public insurers are part of the

Canadian social safety net. Their raison d’être is the provision of prod-

ucts and services deemed essential to the Canadian public.

b) Examples

Examples of public insurers abound in this country. In the field of auto-

mobile insurance, for instance, there are currently four public insurers

in Canada. From West to East, they are the Insurance Corporation of

British Columbia,1Saskatchewan Government Insurance,2Manitoba

6Insurance Law

1 See Insurance Corporation Act, R.S.B.C. 1996, c. 228.

2 See Saskatchewan Government Insurance Act, 1980, S.S. 1979–80, c. S-19.1.