The Participants

• Author: Denis Boivin
• Pages: 3-24

3

CHA PTER 1

THE PA RTICIPA NTS

A. INTRODUC TION

Who are the key players in the Can adian insurance industry and what

are their motives for participati ng in this industr y? Insurance is a

product and a service; it has both providers and consumers. The for-

mer are usually in the business of making prof‌its and can collect ively

be described as “insurers.” The latter are in search of peace of mind

and are willing to make considerable f‌inancial sacr if‌ices to secure it.

They are usually descr ibed as “insureds.” The relationship between

providers and consumers of insur ance is facilitated by a number of

middlemen and women known as intermed iaries. These include agents,

brokers, and adjusters. For intermediaries, insurance is a way of mak-

ing a living; for many, it is a self-regulated profession. In the sections

that follow, each participant is described in greater detail.

B. INSUR A NCE PROVIDERS

Insurance products and ser vices cannot be provided by just anyone.

For reasons discus sed in Chapter 3, the supply of insurance is heav ily

regulated in Canad a. Generally speaking, there are two types of in sur-

ance providers operating in the Canadian industr y: public and private.

INSURANCE LAW4

There are also “self-insurers.” For instance, some corporations have

large and widespread operat ions. In certain areas of their exposure,

they can set money aside to meet future obligations as t hey arise. This

money corresponds to the premiums t hat they would otherwise pay to

an insurer to provide them w ith coverage. In effect, these corporations

are insuring themselves by internalizing risks, r ather than transfer-

ring them to someone else. Because self-insurers deal exclusively w ith

themselves, they are not subject to the regul ations and principles of

law described in this book. As far as t he law of insurance is concerned,

self-insurers are in t he same position as people who save their money

for a “rainy day”; they personally accept the risk that their future obli-

gations may exceed the savings they have accumulated.

1) Public Insurers

Public insurers are creatures of the State. They are found at the federal,

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

ferent forms, including government agencies, boards, and Crown cor-

porations. Public insurers repres ent the interests of the governments

that establish them, administering insurance schemes created by those

governments. They are generally funded through a mixture of tax dol-

lars, premiums, levies, and user fees. They typically have a monopoly

in their respective spheres of activity, although limited competition

may be permitted in certain circumst ances. Thus, they have a relatively

stable clientele. In fact, the procurement of public insurance is genera lly

mandatory. Consumers have little choice but to pay for the products and

services provided by public in surers. Like all government bureaucracies,

public insurers are motivated by something ot her than earning prof‌its.

Simply put, they are part of the Canad ian social safety net. Their raison

d’être is the provision of products and services deemed essentia l to the

Canadi an public.

a) Automobile and Health Insurance

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

mobile insurance, for instance, there a re currently four public insur-

ers in Canada. From West to East, they a re the Insurance Corporation

of British Columbia, the Saskatchewan Government Insurance, the

Manitoba Public Insurance, and the Société de l’assurance automobile

du Québec.1 These government bodies offer basic automobile insurance

1 The statutes th at create these four public insu rers are Insuran ce Corpora tion

Act, RSBC 1996, c 228; The Saskatche wan Government Insurance Act, 1980, SS