Multi-Employer Benefit Plan Council of Canada
March 12, 2015
Ms. J. Seibel
Lawyer
Legal Branch
Government of Saskatchewan
Financial and Consumer Affairs Authority
Janette.seibel@gov.sk.ca
Mr. J. Hall, Senior Crown Counsel
Ministry of Justice and Attorney General
Government of Saskatchewan
Public Law
Legislative Services
Jim.hall@gov.sk.ca
Dear Jan and Jim,
Re: Amendments to Saskatchewan Insurance Act, Bill 177 On behalf of our members, MEBCO appreciates the time you took to meet with our Board member Sid Matthews, on February 26th. We welcome this opportunity to follow up with you regarding MEBCO’s comments on Bill 177, which will amend the Insurance Act. We understand that the regulations are not available and that there are many details to be resolved. We understand the government’s desire to quickly pass Bill 177 and to consult with relevant parties on the regulations. We also understand, and agree with, the consumer?safety focus of the amendments to the Insurance Act.
MEBCO’s concerns centre around the possibility that the amended Insurance Act will not permit plans to provide benefits on a self?funded basis – ie requiring that all benefits be insured. MEBCO was established in 1992 to represent the interests of Canadian multi?employer pension and benefit plans (MEPs). We consult with provincial and federal governments regarding proposed or existing legislation and policies affecting these plans.
MEBCO is a federal no?share capital corporation, operating on a not?for?profit basis.
MEBCO is representative of all persons and disciplines involved in MEPs, including trustees (union, independent, professional and employer), professional third party administrators, non profit or “inhouse” plan administrators, professionals including actuaries, benefit consultants, lawyers, investment managers, investment counsel and chartered public accountants. MEBCO is administered by a Board of Directors consisting of representatives from each of the above groups. The Board of Directors serve MEBCO on a volunteer basis, and are responsible for identifying issues that impact MEPs, developing a strategy to address those issues, and then carrying out the strategy. MEBCO’s member?plans provide comprehensive health coverage to over 1,000,000 Canadians.
While we appreciate that the government’s initiative is meant to assure the security of benefits payable to employees, we believe that this assurance is available through other methods than insurance.
Insurance is a viable option for some plans. However, many of MEBCO’s members are able to provide benefits on a self?funded basis. Self?funded means that the benefit is protected by the assets of the underlying trust fund.
Trust funds are administered by boards of trustees. Trustees manage trusts as fiduciaries which means that the trustees’ actions are carried out solely in the best interests of plan beneficiaries. Trustees are responsible for understanding and developing policies and procedures to mitigate the benefit plan’s risks, including longevity risk, contribution risk, operational risk and investment risk.
Managing benefits in a fiduciary capacity requires that the trustees establish adequate procedures for the payment of benefits in accordance with the plan’s rules. Trustees may retain professional advisory services for claims adjudication and payment. Further, fiduciary responsibility requires that trustees establish and maintain adequate reserves for benefits payable to members, particularly disabled members. Plans that provide benefits on a self?funded basis normally retain an actuary for the purpose of calculating reserves. These plans may, or may not, engage the services of an insurer for some services.
An Insurance Act amendment requiring that benefits be provided on an insured basis will disrupt already established, well managed, self?funded MEPs. Mandatory insurance arrangements result in higher costs for plans that are successfully self?funding these benefits. Introducing mandatory insurance detracts from the authority of trustees and will result in lower benefits to plan members because MEPs have fixed contributions. A reduction in health care or other benefits (for example lower disability benefits, reduced medical coverage including prescription drugs) is inconsistent with protection of Canadians. In particular, private sector MEPs are managing to provide these benefits, keeping citizens from relying on government plans. Mandatory insurance of disability or any benefits will also have a disruptive effect on the operations of health and welfare plans.
We have concerns about the potential desire and ability of the insurance industry to be able to replicate existing coverage in an economical manner. Further, MEPs provide coverage to members in industries that can have significantly different employment arrangements than exist with single employers. MEPs represented by MEBCO are funded by many employers, sometimes hundreds of employers. Funding by several employers mitigates the funding risk and possible consumer exposure present in a single employer plan.
We have concerns about whether legislated insurance coverage could be adequately structured to address these unique needs (e.g., industry risk, portability of coverage, rehabilitation arrangements, return to work requirements, retraining, high service requirements etc.).
We propose that multi?employer plans be exempt from legislated insurance contracts if the plan:
MEBCO has depth of knowledge in this area since many of our members are multi?employer health and welfare plans that have successfully and efficiently provided self?funded benefits for many decades. We would be pleased to provide more information as you continue your deliberations on this matter.Best regards
Robert Blakely,
President
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