• Twenty years of inaction on this most important issue for Ontario seniors

    must be rectified

Two decades is long enough for seniors to wait.
  • 600,000 Canadian seniors live in poverty.
  • Another 600,000 seniors are still in the workforce.
  • More than 2 million seniors live in Ontario, representing 15.6% of Ontario’s population, estimated to rise to 23% in a decade.
  • The need for life settlements is irrefutable and the benefits are well established and, as previously recommended by the Ontario Government, should be part of “the broad field of financial services in Ontario.”
  • Ontario seniors are being denied access to money that is rightfully theirs.
  • Section 115 of the Ontario Insurance Act has been in effect for over 80 years and it was recommended for repeal in 2000 and yet, FSCO, as part of its mandate, has not promulgated the change in Section 115 over the ensuing 15 years.
  • Canadian life insurance companies are opposed to a well-regulated, life settlement industry because a secondary market will allow seniors (if they so choose) to access the fair market value of their policies before death. Currently, it is estimated that 80% of life insurance policies lapse or are cancelled, thereby, never being paid by insurers. This is why insurers are opposed.
  • In 1995 a government committee recommended that the Ministry of Finance look into changing the Ontario Insurance Act dealing with this issue. Nothing has been changed.
  • Many recommendations are being made to governments concerning how to improve the long-term financial well-being of our aging population (i.e., Ontario Pension Plan; increase CPP; increase Tax Free Savings Accounts and contributions to RRSPs), as well as recommendations on how to offset the ever-increasing costs of healthcare. And yet, for the last 15 years FSCO has disregarded Section 115, which could have provided an alternative financial resource and a significant benefit to Ontario’s financially struggling seniors.
The time has come.


Looking back

  • 1994:  James Daw wrote about activity as far back as 1994. “Ontario suggested ‘that insurers make available at least half the face value of most policies at ‘reasonable interest’ when life expectancy is two years or less.” (This is known as a viatical settlement). In the same article, Tory MPP, Frank Sheehan, who chaired a committee on this issue, is quoted, “the government’s legislative agenda is too busy. We can’t just free (the market) up without giving thought to the potential abuse.” Surely 20 years is enough time to not only think about it but to enact something?
  • On March 3, 2015, Finance Minister Sousa announced a panel of experts to review the Financial Services Commission of Ontario’s (FSCO) mandate and James Daw was named as a member of that Panel.
  • 1995: An exemption to Section 115 of the Insurance Act was applied for but did not succeed; however, the Standing Committee On Regulations and Private Bills recommended on Wednesday 24, 1996 that the Ministry of Finance look further into changing the Insurance Act (“an amendment asks the Minister of Finance to give consideration to this as part of an overall industry review”). Nothing has changed.
  • 1997: Living Benefits and Viatical Settlements in Ontario, a feasibility report, April, 1997, recommended that the government: “Permit, and establish regulations for, viatical settlements in Ontario. It further stated: Recent experience in the US shows that viatical settlement companies, when appropriately regulated, can act in the consumer interest and provide a valuable service, filling any gaps left by insurance company programs. Problems arise when, as in Ontario now, viatical settlement companies operate from outside the jurisdiction without regulation.” Nothing has been done.
  • 2000: Bill 119, the “Red Tape Reduction Act of 2000, Schedule G: Schedule G allows for a viatical industry in Ontario to be made legal if licensing is first put in place by the Ministry of Finance. Other documentation states, in part: “The Commission has been asked to recommend repeal of Section 115 of the Insurance Act in order to allow a viatical industry to be established in Ontario … (and) recommends the Commission supports establishing the viatical industry in Ontario … and the Ministry of Finance should develop options to allow this industry to operate in Ontario.”


That’s very clear.

On Dec. 5, 2000, Bill 119 passed by a vote of 46 to 38. That said, Schedule G of Bill 119 was not proclaimed and has not come into effect. It was decided to recommend to the Minister of Finance that the new provisions (Schedule G) not be proclaimed until the insurance industry was given a chance to examine and comment on the regulations that would govern the licensing of the new viatical industry (our italics).


Mark Daniels of the Canadian Life and Health Insurance Association (CLHIA) indicated that it was expected that, prior to proclamation, the draft regulations concerning how viatical settlement companies will be licensed and regulated will be distributed to the insurance industry for comment.

Fifteen years later the people of Ontario still have nothing.

We submit that this is an example of representatives for the life insurance companies and their association obstructing the legislative and promulgation process by delays and obfuscation. Regarding Bill 119, because there was no group advocating for seniors and the benefits of life settlements, we believe the CLHIA misrepresented the degree of fraudulent practices in the United States back then and subsequently, did not support the development of “a robust system of regulation.” Of course consultations needed to “occur before a law is passed, in order to provide time for careful and sober reflection on the complex regulatory issues involved …” But that does not require 15 years.


Conversely, and more recently, in the United States, “there have been only two closed consumer complaints nationwide involving life settlements since 2012, according to the National Association of Insurance Commissioners (NAIC). This is in stark contrast to the more than 8,000 complaints against life insurance carriers in 2014 alone for delays in paying claims.”