Morneau taking close look at return to 30-year insured mortgages

By Bill Curry | Ottawa

The Globe and Mail

The federal government appears to be considering a budget announcement that would allow first-time homebuyers to obtain 30-year insured mortgages, up from the 25-year limit now, according to the Canadian Homebuilders’ Association.

Such a move would represent a change in direction after more than a decade of measures by federal Conservative and Liberal governments since the 2008 recession aimed at cooling housing markets and encouraging Canadians to take on smaller mortgages.

While the Bank of Canada continues to express concern about high household debt, politicians are also getting an earful from younger Canadians – a potentially key voting demographic – who can’t afford to enter the housing market.

Finance Minister Bill Morneau’s coming budget will be the government’s last before the scheduled October election. The minister recently said he is looking at home affordability issues for millennials, but he has not publicly speculated on potential policy options.

Over the past two weeks, top officials from the Prime Minister’s Office and Mr. Morneau’s office met with Kevin Lee, the chief executive of the Canadian Home Builders’ Association, to discuss potential budget measures.

Association spokesman David Foster said there is clear interest from government in the request put forward by housing industry groups to bring back 30-year insured mortgages.

“They keep wanting to talk with us about it, and it wouldn’t cost them a dime, so I’ve got to think those are somewhat positive signals,” Mr. Foster said on Wednesday.

The association discussed the matter earlier this week with Mr. Morneau’s chief of staff, Ben Chin. They also met last week with Sarah Hussaini, a policy adviser in the Prime Minister’s Office.

Pierre-Olivier Herbert, a spokesperson for Mr. Morneau, declined to comment, saying the office does not speculate on potential budget measures.

The association has had several meetings with officials and MPs over the past year in the run-up to the 2019 pre-election budget and recently narrowed down its wish list to just two items: a return to 30-year insured mortgages for first-time homebuyers and an easing of stress test measures that restrict access to non-insured mortgages.

Mr. Foster said officials are expressing interest in both options, but especially the 30-year mortgage proposal because it can be enacted unilaterally by the Finance Department. Changes to the stress test would require the co-operation of the Office of the Superintendent of Financial Institutions, an independent regulator that just this week defended the existing rules.

MP Francesco Sorbara, who chairs a Liberal caucus on housing affordability issues that formed last year and is a member of the House of Commons finance committee, did not dismiss the 30-year mortgage proposal as a way of helping first-time homebuyers.

“It is one idea of many that is worthy of consideration, with the caveat that we maintain a secure and healthy housing market and that individuals are not overextending themselves,” he said.

Paul Taylor, president and CEO of Mortgage Professionals Canada, is also advocating for the 30-year mortgage option and said he was “encouraged” by Mr. Morneau’s recent comments about addressing affordability for millennials. However, Mr. Taylor said he has not received any indication from federal officials that a decision has been made.

The date of the budget has not yet been announced. The House of Commons only sits for one week in March, which makes the week of the 18th a likely window for the minister to deliver the budget. However, there is also speculation in Ottawa that the budget could be released in the final week of February.

Homebuyers with a down payment of at least 5 per cent of the purchase price but less than 20 per cent must be backed by mortgage insurance. This is offered by the Canada Mortgage and Housing Corp. – a Crown corporation – as well as two private insurers.

In 2008, after briefly allowing insured mortgages with a 40-year amortization period, then-Conservative finance minister Jim Flaherty reduced the maximum period to 35 years. The Conservative government lowered the maximum to 30 years in 2011 and acted again in 2012 to bring it to 25 years, where it has stood since. The moves were promoted as a way to prevent high-risk borrowing.

Shortly after the Liberals formed government in 2015, Mr. Morneau announced further mortgage tightening rules that December by doubling the size of the required down payment for insured mortgages for the portion of a home’s value from $500,000 to $1-million.

Mr. Foster, of the home builders’ association, said restricting insured 30-year mortgages to first-time homebuyers should prevent consumers from getting in over their head.

Millennials have most of their working years ahead of them and would likely pay off the mortgage sooner than 30 years, he said.

“We don’t think it involves any additional risk,” he said. “These are prime borrowers.

Source: The Globe and Mail

Insurance Companies Use Emerging Technologies & Business Models to Shake Up Competition

Led by insurtech disruptors, novel business models are causing disintermediation in the insurance industry and altering power dynamics. The rise of technologies such as Artificial Intelligence (AI), Internet of Things (IoT), and smart devices is placing the spotlight on flexible services based on usage-based insurance, on-demand insurance and Prevention-as-a-Service models, which are redefining the role of insurance in people’s lives. These models will especially appeal to Millennials and Generation Z, the newest buying groups.

Lines of business such as liabilityproperty, and casualty will especially gain from models such as Prevention-as-a-Service,” said Lauren Martin-Taylor, Visionary Innovation Principal Consultant at Frost & Sullivan. “Even though insurtechs and start-ups are leading in addressing shifts in social, mobility, and technology trends by pioneering innovative business models, traditional insurers often back them or play an integral role.”

Frost & Sullivan’s recent analysis, The Future of Insurance, analyzes emerging insurable markets and business models, evolution in operations and the value chain, as well as disruptors and opportunities in various lines of insurance. It also covers technologies such as AI, augmented reality/virtual reality (AR/VR), blockchainwearablesimplantsself-healing materials, and automation. An overview of the trends and challenges in each market is presented along with industry best practices, notable activity, and case studies.

Forward-thinking insurers will look to realign their business strategies to tap the growth opportunities presented by:

  • Medical advances, wearables, and growth of the elderly population.
  • Rise in urban population density, particularly in Asia and Africa.
  • The largely untapped low-income demographic in developed countries, which holds huge potential for microinsurance and automation advances.
  • Biological augmentation technologies, which can transform the markets for life insurance and reinsurers.
  • High levels of digitization, increasing data breaches, and cyber threats.

“The auto insurance industry will be one of the most affected by the rising adoption of advanced technologies, as connected and autonomous vehicles will generate real-time data and improve underwriting accuracy,” noted Taylor. “In due course, the focus will shift from insuring drivers to insuring the vehicle, systems, and technology.”

The Future of Insurance is part of Frost & Sullivan’s global Visionary Innovation (Mega Trends) Growth Partnership Service program.

About Frost & Sullivan

For over five decades, Frost & Sullivan has become world-renowned for its role in helping investors, corporate leaders and governments navigate economic changes and identify disruptive technologies, Mega Trends, new business models and companies to action, resulting in a continuous flow of growth opportunities to drive future success

Canada budget to include limited coverage for prescription drugs – sources

OTTAWA/TORONTO (Reuters) – Canada’s Liberal government will propose a limited expansion to the country’s universal healthcare system in the spring budget to cover part of the cost of prescription drugs, two sources with direct knowledge of the matter told Reuters.

The modest broadening of the healthcare program is set to become one of Prime Minister Justin Trudeau’s key campaign promises ahead of the October election, which is shaping up to be a close fight.

The government would not commit to meeting 100 percent of the cost of prescription drugs for those who have no insurance through their workplace, the sources said. That suggests the government is leaning toward a narrower, more insurance industry-friendly model of pharmacare, as it is called, than that recommended by a government health committee last year.

A spokesman for Finance Minister Bill Morneau declined to comment.

Officials have yet to decide how much detail to provide about the pharmacare system in the budget, which is expected in the week of March 18, the sources said. They may release a general commitment to boost coverage and leave the specifics for the campaign, they added.

But new information on pharmacare’s inclusion in the spring budget and its limited scope gives a first glimpse of the government’s blueprint for what has been called the “unfinished business” of Canada’s publicly funded healthcare system, called medicare.

The sources, who spoke in recent days, requested anonymity because they were not authorized to speak to the media.

Canada’s health system covers care provided in hospitals and doctors’ offices, but prescription medication remains largely the purview of private insurance, often offered through employers, and a patchwork of public plans geared primarily toward the old and the very poor.

Opinion polls consistently show strong popularity for Canada’s public healthcare system.

There have been calls for Canada to extend medicare to include prescription drugs since medicare came into existence in the late 1960s, and multiple studies have recommended its inclusion.

Surveys have found 20 percent of Canadians are either uninsured for prescription drugs or under-insured, and one in 10 Canadians goes without prescription medications because of an inability to afford them, according to the standing committee on health’s pharmacare report released in April 2018.

Manulife Financial Corp, Sun Life Financial Inc and Great West LifeCo are among the major insurers in Canada.

FILLING IN GAPS

The Liberal-dominated government health committee strongly recommended Canada adopt a universal, national pharmacare program that covers drug expenditures for all Canadians for a wide range of drugs.

That would not only improve equity and access, advocates said, but lower drug costs because there would only be one buyer negotiating with pharmaceutical companies.

The government’s budget watchdog estimated that would cost about C$20.4 billion ($15.5 billion) a year – a hefty price tag for the government, but offering an overall saving of C$4.2 billion compared with the total now spent on prescription drugs.

What the government is likely to include in its budget is a much more targeted plan aimed at filling the gaps in coverage not already filled by private insurance or existing public plans, the sources said.

That matches with the government’s finance committee recommendation late last year, which Morneau, himself a former benefits industry executive, has said he would prefer.

It is also in line with what the insurance industry has been asking for. Standing to lose business to a universal government plan, the insurers have argued that most Canadians have good private coverage and that pharmacare changes need only affect a small uninsured minority.

But the Liberals will likely face criticism from policy advocates and left-leaning political opponents for not pursuing a more comprehensive plan. Without a universal system overhaul, advocates argue, people will continue to slip through costly cracks in the coverage system.

An advisory council appointed to study the implementation of pharmacare is expected to come out with recommendations this spring.

Michael Litt: The misunderstandings and misconceptions surrounding our digital industries are killing our economic potential to move ahead as a nation

Read more
We’re well into 2019 and New Year’s resolutions are probably being broken.
Read more

CSU, GSA to propose insurance plan

The excerpreted article was written By Mina Mazumder

The university’s plan for international students expires in the spring

The Dean of Students Office is renegotiating the university’s health insurance plan for international students, according to John Hutton, finance coordinator for the Concordia Student Union (CSU). The students’ existing health coverage plan expires this spring, according to Fiona Downey, Concordia’s interim spokesperson.

Currently, Concordia has a separate health plan for international students. This contract is managed by Andrew Woodall, the Dean of Students, and Blue Cross, the private health insurance company that covers all international students.

The health insurance plan for undergraduate Canadian students is managed by the CSU and Studentcare/Alliance pour la Santé étudiante au québec (ASEQ), the largest collective insurance plan administrator for student health and dental care in Canada.

For graduate Canadian students, it is managed by the Graduate Student Association (GSA) and Studentcare/ASEQ, according to Hutton.

“Concordia international students currently pay for the single most expensive international student health plan in the country,”said Hutton. He speculated that the high expenses are due to the fact that there isn’t much competition between different health premiums in Quebec. Hutton added the university was more focused on simply providing a healthcare insurance plan for international students, than it was on making it affordable.

According to Hutton, the contract is run on a multi-year basis, usually three years but sometimes it can be extended for an additional year. The tabled three-year contract’s rate is being renegotiated between the Dean of Students and Blue Cross, according to Hutton.

“They are not getting the best health insurance plan in Canada at Concordia,” Hutton said, adding that the CSU received complaints from international students related to the co-payment for medications, lack of access to certain services like hormone therapy, and lack of dental coverage.

Tallie Segel, a second-year PhD student in social and cultural analysis at Concordia, is an international student from the United States. “I would love to have dental insurance and vision coverage,” said Segel. “I have a really strong prescription that changes often. Especially with student life, the type of work that I do, it causes a lot of eye strain and I am worried about my eyes all the time.”
Segel said the administration never told her how her insurance worked in terms of what is covered and what is not. “I don’t have a clear understanding here how the plan works and what is covered,” she said.

Segel added that the process for prescription reimbursement with Blue Cross is a bit of a hassle, and therefore, she does not make the effort to have it refunded, especially since her monthly prescription is inexpensive. Last fall, Segel paid almost $1,200 for her health insurance plan as part of her tuition fees.

According to Amir Molaei, the president of the GSA, the cost of the insurance for international students varies based on their status whether they are single, married or have a family. Molaei said that from 2015 to 2018, there was a 17 per cent increase for the single student plan and a 32 per cent increase for the couples and families plans. He added that this had affected a large number of graduate students.

Molaei explained that since some fees are not covered, such as dental insurance, many international students prefer to go back to their home country for the treatment they are unable to receive in Canada.

Molaei said he had some issues accessing Concordia’s Health Services. “I asked the receptionist that I want to have a [general] check-up,” he said. “They told me that if there is no problem with you, we wouldn’t refer you for the check up.” When Molaei went back home for the holidays, he visited his doctor and found that he had a deficiency in certain vitamins.

Hutton said the CSU and the GSA are presently preparing a pitch for the administration asking to put student associations in charge of the insurance plan for international students. “We would have a more transparent plan that would have more information easily available to students,” Hutton said. “We would be both able to negotiate a better deal in terms of lower premiums, more coverage, and have more incentive to do so.”

Molaei and Hutton said the GSA and the CSU will be meeting Woodall on Feb. 1 to discuss their proposal to manage the international students’ health plan. Although Downey did not confirm who was meeting with Woodall and Kelly Collins, the manager of the International Students Office, she did confirm they were meeting with student groups this week to start a consultation process.  The aim will be “to gather information about what’s needed in a new health plan and what options exist going forward,” said Downey.

Both the union and the association have already reached out to many insurance plan providers to seek additional advice concerning this proposal. “As the current international student insurance plan is with the administration of the university, student organizations don’t have control over it and we hope to be able to take the control over the international students insurance in the near future,” Molaei said.

Source: theconcordian

Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates from ILSTV

You have Successfully Subscribed!

Pin It on Pinterest