Blog | Here lies your money

November 24, 2015 by Leonard Goodman

Enough!

This is not a time for a “white flag!” Life insurance settlements must become a reality in all of Canada, sooner versus later

I have never been a white flag type of guy. I believe when the cause is right, quitting is not an option. And the cause that I have been pursuing, on behalf of Canadian seniors, for more than two years is right! I’ve written a book, met with numerous politicians and staff, submitted extensive documentation to government agents, communicated with many in the life insurance industry, contacted the press, had interviews, written articles, founded the Life Insurance Settlement Association of Canada … and after two years, little has changed.

I’ve had enough!

I am taking up a red flag and I intend to carry it until this critical issue is resolved. And I’ll do it on my own if I must. Like Howard Beal said in the 1976 movie, Network, “Things have got to change … I’m as mad as hell, and I’m not going to take this anymore!”

This is wrong

Six provinces in Canada prevent their residents from being able to receive fair market value for their life insurance policies if they choose to sell them and this violates a fundamental principle of a free market system. In Ontario, under the Ontario Insurance Act, there is a regulation (Section 115) that states that to buy life insurance policies from willing sellers is “trafficking” and a criminal offense. I suggest that that regulation is a violation of a person’s rights and the rights of both a seller and buyer to receive fair market value.

The Canadian Income Tax Act defines fair market value as follows:

The price a willing purchaser will buy from a willing seller in an unrestricted and open market, with neither party being under undue pressure.

Illustration courtesy meltonpriorinstitute.com

Initially, my focus has been in Ontario with it’s more than two million seniors and my point is simple:

The need for consumers to receive a fair market value for an asset they own, a life insurance policy, is a fundamental right, which currently is not available to Ontarians. Fair market value is a cornerstone of any financial sector and economy and yet, for decades seniors have been prevented from receiving the fair market value for this important asset. Basically, life insurance companies are the only buyers of policies – that’s called a monopoly – and in many cases the only alternative to selling is to let the policy lapse. The absence of a secondary market has allowed this unfair, monopolistic practice to continue for decades. Furthermore, one of the best ways of protecting consumers from monopolistic and predatory practices is to provide a well-regulated, fair and competitive marketplace.

I have spoken to hundreds of seniors and they are as perplexed and concerned as I am. Outraged that those who preach helping and protecting them (insurers and government agencies – FSCO) have done nothing for over twenty years. Unfortunately, only a small percentage of the tens-of-thousands who might choose a life settlement as an option are aware of this egregious undermining of their rights – not to mention perpetuating a barrier to their financial well-being. Therein lies the problem. Seniors don’t know about this option and no one is offering them the opportunity to learn more and explore alternatives.

I intend to change that

I am going to take the message directly to the public and offer seniors an opportunity to understand life settlements, weigh their options and if they choose, sell their policy – to me! In other words, I plan to offer a fair market value purchase of a senior’s qualifying life insurance policy, likely at a far greater value than they would receive from their life insurance company. If that’s considered “criminal,” so be it.

Enough is enough! Someone has to do what is right for Canadian seniors.

In the weeks ahead, we will be inviting those who agree with the need to create a competitive market to join us in this on going battle for seniors’ rights. If you would like news and information from the Life Insurance Settlement Association of Canada (LISAC) send your email address to: info@hereliesyourmoney.com

If anyone, including the many members of seniors’ organizations like Probus and CARP, would like to know if their policy qualifies for a life settlement and what its fair market value could be, I’d be more than happy to provide you with an estimate – no charge.

Contact: 416-368-5351 x 226 Email: agoodm5702@rogers.com

October 15, 2015 by Leonard Goodman

Flash Boys in life insurance

“It would have been difficult to find anyone, circa 2009, able to give you an honest account of the inner workings of the American stock market … complicated beyond belief by possibly well-intentioned regulators and less well-intentioned insiders. That the American stock market had become a mystery struck me as interesting. How does that happen? And who benefits?” – Michael Lewis, April 2015

I recently read Michael Lewis’s bestselling book, Flash Boys, and was struck – amazed – at how common the Wall Street themes and conditions were to the life insurance industry, and what I encountered before writing my book, Why Are Canadian Seniors Worth More Dead Than Alive? Paraphrasing and changing slightly what Lewis said above, I would say:

“It would have been difficult to find anyone, circa 2009, able to give you an honest account of the inner workings of the Canadian life insurance industry … complicated beyond belief by possibly well-intentioned regulators and less well-intentioned insiders. That the Canadian life insurance industry has maintained and promoted a false premise and used false indicators to protect their financial position and erode Canadian seniors’ financial position has become too egregious for me. How does that happen? And who benefits? That’s why I wrote my book.” – Leonard H. Goodman, October, 2015

My purpose parallels Michael Lewis’s in many ways. Primarily, to expose practices (for Lewis, it’s high frequency trading) that amount to the the theft of the public’s invested money and retirement assets, which has continued unabated for decades, mainly because the public does not know and the insiders influence governments, insidiously. As Lewis claims, this injustice is sanctioned by government regulators. For example, in the case of life settlements in Ontario, the Financial Services Commission of Ontario (FSCO), a government agency, which is currently under review by the Ministry of Finance, has ignored for two decades the potential for a well-regulated life settlement industry.

Canadian seniors have invested for decades in their life insurance (an asset they own) and yet, they have no access to a secondary market where they could receive fair market value for their policy through a life settlement. As in Flash Boys, it is those with the power and money that control and manipulate the system – and governments – to their advantage. As Lewis states, “people are getting screwed …” because of injustice perpetrated against unknowing investors (substitute: policy owners) by the greed of large Wall Street banks (substitute: Canadian life insurance firms).

Goldman Sachs’s Manhattan headquarters (photo by Justin Bishop)

As Lewis said, “The Flash Boys story put in jeopardy billions of dollars of Wall Street profits and a way of financial life … It became inevitable that Flash Boys would seriously piss off a few important people: anyone in an established industry who stands up and says “The way things are being done here is totally insane; here is why it is insane; and here is a better way to do them” is bound to incur the wrath of established insiders, who now stand accused of creating the insanity.” – Michale Lewis, April 2015

Canadian life insurance companies face somewhat the same jeopardy because a secondary market for life settlements would move billions of dollars from their pockets into the pockets of seniors. Even though it is the right thing to do, they have resisted it for decades. They are not interested in what is good for their customers, Canadian seniors, government healthcare costs or our country, they are only focused on their bottom line. It’s a travesty of justice and moral values.

Like Lewis, I want to open up a closed window and expose the egregiously entrenched greed that’s rooted in the self-interests of the Canadian life insurance industry, all of which is to the detriment of 5.6 million Canadian seniors, not to mention all taxpayers.

“If this story (Flash Boys) has a soul, it is in the decisions made by its principal characters to resist the temptation of easy money and to pay special attention to the spirit in which they live their working lives. I didn’t write about them because they were controversial. I wrote about them because they were admirable. That some minority on Wall Street is getting rich by exploiting a screwed-up financial system is no longer news. That is the story of the last financial crisis, and probably the next one, too. What comes as news is that there is now a minority on Wall Street trying to fix the system … All they need is a little help from the silent majority.” – Michael Lewis, April 2015.

Michael Lewis’s book changed the stock market landscape forever, and I believe we can do the same in the Canadian life insurance industry.

Never doubt that a small thoughtful group of people can change the world. Indeed, it is all that ever has. – Margaret Mead, anthropologist.

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August 6, 2015 by Leonard Goodman

Regulation and life settlements are on the table at Queen’s Park

FSCO Panel hears about life settlement issue

An “Expert Advisory Panel” appointed by the Honourable Charles Sousa, Minister of Finance, is reviewing the mandate of the Financial Services Commission of Ontario (FSCO) and on July 30th the Panel held a two-hour consultation meeting at Queen’s Park with members of the life & health insurance sector. I attended with two colleagues.

The advisory panel’s members are:

George Cooke – former president and CEO of The Dominion of Canada General Insurance Company, and current chair of the board of directors of OMERS Administration Corp.
James Daw – former Toronto Star personal finance columnist who has written extensively about all facets of Ontario’s financial system.
Lawrence Ritchie – Osler, Hoskin & Harcourt LLP partner and former vice-chair of the Ontario Securities Commission.

Participating groups included: Life Insurance Settlement Association of Canada (LISAC); Canadian Life and Health Insurance Association (CLHIA); Financial Advisors Association of Canada (Advocis); Canadian Association of Financial Institutions in Insurance (CAFII); Independent Financial Brokers of Canada; and Sun Life. I was there as President of LISAC, along with David Hughes, Executive Director and Andrew Roman, legal counsel.

The Panel held a broad ranging discussion and explored many issues, from FSCO’s resources and regulatory requirements to “rule making power” and fraud. There was much debate over the pros and cons of “harmonization” and “self-regulation” by industry groups, as well as the merits of rule making versus guidelines such as those practiced by the Ontario Superintendent of Financial Institutions. Throughout, the Panel reiterated that the overriding goal was that their recommendations must support and reflect what is in the best interests of the consumer.

Fraud

James Daw was particularly interested in the issue of fraud and whether a fraud compensation fund might be advantageous. I listened with interest as I believe this question is very relevant to the overarching issue of regulations – particularly in conjunction with the insurance industry’s statements and hyperbole about “serious risks” of fraud related to life settlements.

I listened … and listened. Waited. After two hours of open discussion, nobody – not one representative of the life insurance industry – had anything to say about their longstanding allegations of serious risks with life settlements. It was as if they were avoiding opening up a discussion. So in the end, I raised the issue.

I told the Panel that LISAC’s primary focus was the subject of life settlements and that we believe FSCO has failed the people of Ontario, especially seniors, for more than 15 years. I said any discussion of regulations must include what is conspicuously absent in Ontario’s financial services sector – a well-regulated secondary market for life settlements. It deprives the owners of life insurance from receiving fair market value for their policies. I reiterated the significant benefit life settlements are providing for seniors in the US, and other countries around the world, and how Ontario was perpetuating an egregious disservice to its more than two million seniors.

I referenced a letter dated July 13, 2001, written by then CEO of FSCO, Dina Palozzi, which concluded, in part, “there is a consumer demand for viatical settlements and that this demand will grow with the demands of an aging population.” The letter further stated, “The Red Tape Reduction Act, 2000, Schedule G, included amendments to section 115 and 121 of the Insurance Act … and the amendments open the way for viatical settlement companies to operate in Ontario.” I pointed out to the Panel that the glaring 15 year gap between political intent and no action has meant that billions of dollars rightfully belonging to seniors have continued to flow to insurance companies. I also emphasized that opposition to life settlements rests squarely with the insurance companies, not the qualified life underwriters, brokers and financial planners.

The panel listened. And if note taking is any indication of interest then I believe they understood, not only the magnitude of the issue but also the ramifications of FSCO’s neglect to follow through.

Serious risk?

Insurance companies have been propagating the myth of “serious risk” for at least two decades. And it is a myth. Back on November 1, 2000, Mark Daniels, representing the CLHIA, went before a legislative committee addressing Bill 119, the Red Tape Reduction Act and claimed the viatical and life settlements market “has been characterized by widespread fraud and abuse…” It was an irresponsible, misleading, false statement. And yet, it delayed action for 15 years. Worse, today Canadian insurance representatives continue to provide false witness to the truth. The truth is, life settlements are good for everyone, except life insurance companies.

The US has a thriving, well-regulated life settlement industry that they have developed over the last two decades, while Ontario has done nothing, even though the Province’s political will and legislative action has recommended establishing a life settlement industry.

In the US, on May 4, 2015, the newly appointed Massachusetts Insurance Commissioner, Dan Judson, stated:

“there are no records of consumer complaints against anyone associated with a life settlement transaction in the commonwealth of Massachusetts.”

Also, according to the National Association of Insurance Commissioners (NAIC):

“there have been only two closed consumer complaints nationwide involving life settlements since 2012. This is in stark contrast to the more than 8,000 complaints against insurance carriers in 2014 alone for delays in paying claims.”

False statements by Canadian insurance companies should not distract from the greater benefit of a well-regulated life settlement market for all Ontarians.

Are we regulating trafficking or theft?

I suggested that in the Panel’s deliberations of FSCO’s “new” mandate regarding regulations that they ensure FSCO oversees and supports a well-regulated, secondary market for life settlements. FSCO should not relinquish its regulatory role to a “self-regulation organization” (SRO), particularly with the insurance companies or surrogates having a prominent role. As I have said before, that is akin to letting the fox regulate the hen house.

I reminded the Panel that for decades insurers have opposed the repeal of section 115 of the Ontario Insurance Act, which uses the pejorative term “trafficking” in reference to the sale and purchase of an in force policy. I consider the much bigger fraud in Ontario to be the practice of insurance companies, through the contractual agreement of a life policy, restricting policyholders to a buy back option (cash surrender value) that is far below the fair market value of the asset, at least four times lower (based on a study of 9,002 policies).

Self-interest vs consumers’ interest?

Ontario seniors have been deprived of their rightful access to the fair market value in their life insurance policies for decades and today we have an opportunity to rectify this wrong. And based on my observations at the Expert Advisory Panel session, I am optimistic that the panel understands and that they will address this issue in their report to the Minister of Finance.

FSCO’s past failure to deal with this obvious void in Ontario’s financial services must not be allowed to continue. FSCO’s regulatory mandate should not, in any way, be based on insurance industry innuendo nor should the panel consider a self-regulation organization (SRO) that can can be controlled or influenced by the same people who have shown the enormity of their self-interest over the best interests of the consumer – and the Government of Ontario.

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July 13, 2015 by Leonard Goodman

Is a nil fair market value fair? Life insurers think so

Adam Smith (1723-1790) would frown on Canadian life insurance providers

“Open-flat and fair markets are the wealth generators that then enable us to take on great projects like education and science and helping the poor …”

I recently received a tax planning bulletin from an insurance company that addressed a long-standing question in financial planning: How does Canada Revenue (CRA) look at the value of different assets for tax purposes? This bulletin was about products that combine annuities and life insurance, and, for me, one statement stood out.

“One accepted measure of fair market value is based on the value at which arm’s length parties would normally transact. If another person cannot purchase the asset, it is arguable that its fair market value is nil.”

Nil fair market value isn’t always fair

In this bulletin and in the insurance company’s opinion, if there is no arm’s length party to establish a value for an asset then it has no value. I understand the importance of eliminating or reducing asset value for tax purposes; however, there are times when it can have a negative impact on a client’s financial plan. Inherent in this thinking is the less obvious and yet perhaps more harmful issue of eliminating “arm’s length parties” who can establish fair market value (FMV).

I say this in light of the insurance industry’s long-standing opposition to establishing a well-regulated secondary market for life settlements in Canada. When it comes to policy owners receiving FMV through life settlements, insurers wave the tax flag or the “serious risks” misconception. They also imply – sometimes not too subtly – that Canadian financial planners must not address the potential fair market value available in a client’s policy through a life settlement transaction. This, in turn, leads to less than complete, even inadequate, financial planning advice. In the US, financial planners have a fiduciary responsibility to advise clients about the value in life settlements.

Limited and poor financial planning

“The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers.” – Adam Smith, Wealth of Nations, Chapter XI, Part III, p. 292.

A fundamental responsibility of financial planners is to maximize the financial benefits for their client, which requires balancing any number of factors, taxes being one of them, another being the maximization of asset value. Therein lies the rub – and a big short coming in the provision of effective financial planning.

In Canada, if a client of a financial planner owns life insurance the planner cannot adequately advise the client on how to maximize the value of that asset for two reasons. 1) There is provincial regulation, in six provinces, that prevents the establishment of a secondary market for life settlements; and 2) the financial planning firm is at risk of having service agreements with insurance companies cancelled by the insurer if they advise clients about life settlements. As Adam Smith’s principle states: “The interest of the dealers … is always in some respects different from, and even opposite to, that of the public.” Current government regulations serve the self-interests of “the dealers” – insurance companies – over the interests of customers.

For decades insurers have suppressed FMV and subjugated financial planners to the same self-interest; thereby, limiting the value of financial planning to clients. Under current conditions, financial planning serves to aid and abet insurance providers from having to compete in a fair market system. Adam Smith would not approve.

Regulations like Section 115 of the Ontario Insurance Act and as proposed in Saskatchewan’s Bill 177, plus the insurance industry and governments’ continued support of them, means that a life insurance policy’s “fair market value is nil.” It is a complete distortion of the seminal principles set out in Adam Smith’s two great books, The Wealth of Nations (1776) and The Theory of Moral Sentiments (1759) – not to mention a significant distortion of the true value of an asset owned by over 3 million Canadian seniors.

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June 22, 2015 by Leonard Goodman

Death and taxes are certain – but this tax is avoidable

It's the hidden taxes that are killing us. (photo:iz)

This hidden tax is killing us.

Section 115 of the Ontario Insurance Act is a hidden tax on seniors

We begrudgingly accept that there are “hidden taxes” in the price we pay for things like gasoline and liquor, but at least we know it’s there. And we get some benefit – we get to drive and drink (as opposed to drink and drive). But the tax I am referring to is one that few people know about and it’s not even considered a tax. But it is. On seniors. And seniors get absolutely no benefit from it.

Tax (noun): a compulsory financial contribution imposed by a government or other institution to raise revenue, levied on the income or property of persons or organizations, or on the production costs or sales prices of goods and services.

What you own is yours

Millions of us have assets: perhaps a house, a savings account, a GIC, RRSP, life insurance policy. In most cases the value of our assets appreciate over time and, of course, we have the right to sell or divest of that asset in a free market system, any time we want. And depending on the tax laws, sometimes we are taxed on the proceeds and sometimes we are not. Whether we agree with the taxes or not that’s the way it works and we are aware that we live in an insatiable tax system.

At least we get some benefits from the taxes we pay, even the hidden version, but very few are aware of the detrimental impact of the Ontario Insurance Act, Section 115 nor that the only financial benefit it provides is to insurance companies.

Ontario Insurance Act/Section 115: A compulsory financial contribution imposed by government and life insurance companies

The cash value you don’t receive is the hidden tax revenue that goes to insurers. (illustration: twinterfinancial.com)

It’s simple. Section 115 prevents owners of life insurance policies from receiving the fair market value for their asset, if they choose to divest their interests in it prior to death. And receiving less than fair market value due to a government restriction is, by definition, “a tax on income and property.” More egregious is the fact that the compulsory reduced value in the asset becomes revenue, not in taxes to the government to fund social programs but to the insurance companies bottom line. It amounts to billions of dollars every year being in insurance companies’ bank accounts rather than seniors’ bank accounts.

The owner of a life insurance policy is restricted by law and must take the “cash surrender value” rather than accessing the fair market value for their policy. On average, the amount they receive in cash surrender value is less than 25% of what they could get in the open market. That is a punitive tax – “a compulsory financial contribution … levied on property,” which is used “to raise the revenue” of insurance companies.

Who needs money from life insurance?

It’s a simple question and any good insurance broker or financial planner can answer it with any number of good reasons. But if the client needs money now, before they die, advisors have only one answer: Take the cash surrender value in your policy, if there is any – even though it’s significantly less than you could get through a life settlement in a well-regulated secondary market. Sorry, you’ll have to wait until you die.

This misappropriation of policy owner rights and their access to the fair market value has been buried in bureaucracy and the fine print of the Ontario Insurance Act for decades. Unfortunately, the same type of regulations are currently being written into Saskatchewan’s new Bill 177 (see previous blog below: Deja vu all over again), which will set seniors’ financial situation back decades.

Creating obfuscation undermines seniors’ rights

Jim Hall, senior crown counsel for Saskatchewan Financial and Consumer Affairs Authority (FCAA), under the guise of “consumer protection” – which is the red herring insurers role out to obfuscate the real financial problem for seniors – has said, “Unless there is some National initiative that brings together all the jurisdictions…….” What? That’s nothing but spin in support of delay and confusion, which, of course, favours insurance companies. Insurance acts are regulated by the provinces and any suggestion of a “national initiative” is blatant support for years of delay – to the detriment of seniors. Besides, everyone is for regulations, it’s a matter of creating and implementing them, not just using their absence as fear-mongering.

Until such regulations are removed or replaced by a new bill, seniors must live with the inevitability of this counterproductive tax. Unless, of course, they demand that their MPP or MLA insist on changing the offending regulation, thereby, eliminating what amounts to an tax on seniors and the system, while topping up the insurance companies’ coffers by a few extra billion.

With one stroke of a government pen and this tax can be eliminated.

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June 8, 2015 by Leonard Goodman

Seniors get the math

$Amid the complexity only a few numbers matter$

15 + (119-115) + FSCO = 0. It’s inept bureaucratic math

Fifteen years ago the Government of Ontario passed Bill 119, the Red Tape Reduction Act, which included the repeal of Section 115 of the Ontario Insurance Act, the egregious regulation that prevents seniors from accessing the fair market value in their life insurance policies. The Financial Services Commission of Ontario (FSCO) is responsible for promulgating what the “Harris Government” directed back then. Today, 15 years later FSCO’s action adds up to 0 – zip, nada. The June 5, 2015 submission to FSCO by the Life Insurance Settlement Association of Canada (LISAC) covers this flagrant lack of service to the Ontario public (download .pdf).

Here lies your money

And the money that could have been available to Ontario seniors during that period would add up to billions – that’s with a “B.” Instead, with a little, old-math tutoring (lobbying) of the government by the life insurance industry, all those billions are still in the pockets of the insurance companies.

For the last two decades, the political intent, interest and will has been evident. The Government of Ontario wants to establish a well-regulated life settlement industry in Ontario and yet, the elected official’s voices – seen in many transcripts and bills – have fallen on the deaf ears of bureaucracy. What politicians want the public does not necessarily get – due to lobbying and bureaucratic sclerosis.

Last week, I spoke to over a hundred members of the Northumberland Probus Club in the beautiful town of Cobourg, an hour east of Toronto. I informed them that their rights and their net worth were being undermined by bureaucratic ineptness and I also suggested it was time for their voice to be heard. (Read article – at site, search “Anytime,” insert “insurance professional”).

Newspaper article

What happened to Bill 119 in 2000 should not happen to Bill 70

Lou Rinaldi, MPP Northumberland-Quinte West introduced Bill 70

Northumberland County, represented by MPP Lou Rinadli (Liberal), is home to more than 20,000 seniors, which represents 27% of Northumberland’s population. This compares to 15.6% of the population across the province. It’s a beautiful community with many retirees and it probably has more than its share of seniors struggling financially in so-called retirement.

In fact, this financial concern for seniors is reflected in MPP Rinaldi’s introduction of Bill 70 (March 2015) to protect registered retirement savings plans and registered retirement income funds, as well as deferred profit sharing plans, from most creditors. Bill 70 is an important issue for the higher-then-average, aging population in his riding and it has passed second reading. But beware, sometimes “political will” cannot overcome the barrier of big-money lobbying and bureaucratic denial. Back in 2000, Bill 119 passed the Legislature and yet, its repeal of Section 115 has never happened. If it had, Ontario seniors would have a well-regulated life settlement industry today. That is one of the reasons I met with the Northumberland Probus Club.

Probus cares about seniors, CARP cares about CARP

I want to thank Lynn Ramsay, President of Northumberland Probus, and Harry Nash, Speaker Coordinator, for inviting me to speak to their members. I came away with a clear impression that Probus members care about the issue of life settlements and the fact that government bureaucracy has prevented them from having access to the hidden value in their life insurance – for at least 15 years.

: Leonard H. Goodman
(photo courtesy: Northumberland Today)

After just this first event, I saw a distinct difference between Probus and CARP, two organizations advocating for Canadian seniors. For months I have tried to open up a conversation with CARP, particularly with their VP of Advocacy, Susan Eng, to discuss the merits of life settlements. Nothing. Like FSCO, they appear to be stuck in the past. Or stuck in the pockets of life insurance companies. In contrast, Probus invited me to speak to them and from this one meeting more than 70% of the attendees sent a postcard to their MPP stating they wanted action on Section 115. I’ve coined what I consider an apt phrase: Probus cares about seniors, CARP cares about CARP.

Don’t get me wrong, I am open to changing my mind. All it requires is for CARP to open up their mind to a full and open discussion on the merits of life settlements for thousands of their members – most importantly, open up their communications to their members. It’s a crucial conversation that all seniors should be having. It’s going to happen sooner or later, and in the interests of tens-of-thousands of CARP and Probus members, it can’t be soon enough.

Probus is doing something about it. CARP isn’t.

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May 18, 2015 by Leonard Goodman

Déjà vu all over again – in Saskatchewan

Yogi Berra – 1950

Yogi Berra’s pithy quote fits Saskatchewan’s Bill 177, The Insurance Act

As most of you know, I am a rather serious baseball fan so when I read that Saskatchewan’s government had given Royal Assent to Bill 177, cited as The Insurance Act, Yogi’s quote came to mind. The only difference, Yogi said it in the 1980s and the Saskatchewan legislation is taking us back to the 1930s. And as funny as Yogi’s quote is, Bill 177 is no joke for Canadian seniors.

What are they thinking?

Saskatchewan legislature circa 1920

Bill 177 is the tip of the legislative iceberg, driven by the influence of special interest groups, in this case, the insurance lobby. They have managed to include clauses that mirror the egregious regulations Ontario legislators tried to exorcise from the Ontario regulations 15 years ago (see blog below: Outliving your money and government inertia). Saskatchewan is eroding seniors’ rights and taking a giant leap backward by ignoring an opportunity to provide a viable financial alternative for seniors through the provision of life settlements.

Who benefits?

In a February 13, 2015 article in The Deal, by Judith Curtis, Jim Hall, senior crown counsel for Saskatchewan Financial and Consumer Affairs Authority (FCAA) said, “What we are doing now is modernizing the regulation of the industry.” I ask Mr. Hall and elected officials: To the benefit of who?

In the United States and around the world, life settlements are benefiting seniors and supporting the public interest having “modernized the regulation of the industry,” by allowing seniors to gain the fair market value for their policy through a secondary market. Saskatchewan in not modernizing, they are going back in time.

Creating a fictional “wild wild west”

Jim Hall rolled out the oft repeated, fictional claim made by insurers when he said, “Right now there is no satisfactory regulatory regime that addresses the potential consumer risks represented by viaticals. It’s the Wild West. If there’s going to be a new kind of financial instrument sold to consumers there has to be some regulatory oversight.”

Hall is half right – the need for “regulatory oversight.” So create regulatory oversight rather then perpetuate archaic, oppressive regulations that take away policy owners’ right to access the fair market value for their asset.

He also said, “Equally important is consumer protection”. Again, he is half right. Right in wanting to provide consumer protection, wrong in that he’s attempting to provide protection by removing policy owners’ rights, which, in turn, benefit the insurance companies. It appears as if he’s advocating to protect and benefit insurers, not seniors.

Mr. Hall then added insult to injury (to Saskatchewan seniors) when he said, “Unless there is some National initiative that brings together all the jurisdictions…….” What? That’s spin in support of delay and obfuscation, which, of course, favours insurance companies. He knows insurance acts are regulated by the provinces and any “national initiative” would create years of delay. I understand Mr. Hall is retiring this spring, leaving, in my opinion, a disastrous financial legacy for his fellow boomers and seniors.

A window of opportunity
Apparently, for Bill 177, there will be a new sheriff in Saskatchewan’s wild wild west, a Ms. Janette Seibel, a lawyer with FCAA. This could be good. Plus the fact that the process for changes to Bill 177 is still open. The wheels of government grind slowly and Bill 177 will not be enacted until late 2016 or early 2017 so that provides time for the introduction of new regulations that can clarify and override the current Bill as it stands.

A serious effort must be made to ensure that Saskatchewan seniors get a fair hearing on the value life settlements can offer them if they want an alternative and additional financial resource – beyond the cash surrender value offered by insurance companies. LISAC, on behalf of millions of Canadian seniors, is leading an initiative to right the wrong of this, and other, misdirected legislation. We need an open, transparent public debate on life settlements – now!

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May 6, 2015 by Leonard Goodman

Strange politics in an election year

Meet the Chair of the Conservative Party’s insurance caucus, Peter Braid

Perhaps the constituents of MP, Peter Braid (Kitchener-Waterloo) can be more successful than I have been in opening up a conversation with him. Over the last couple of months I’ve sent several communications to Mr. Braid (see last email below) and as of yet, no response. That’s strange in an election year. And what’s even stranger is the fact that Mr. Braid is head of the Conservative’s insurance caucus and I have attempted to communicate with him on an important life insurance issue, not to mention that I have been affiliated with the life insurance industry for more than fifty years.

I am not sure if it is lack of respect or a lack of political savvy. Either way, I don’t think Mr. Braid is familiar with the axiom espoused by the late Tip O’Neill, US Speaker of the House, who said, “All politics is local.” In other words, politicians need to pay attention to what the voters are asking. And I have been asking Mr. Braid some tough questions – on behalf of his voters – regarding life settlements and the opportunity that they can provide in helping seniors with their financial difficulties. He might be able to ignore me, but he ignores the needs of seniors at his peril.

“Give people options … voluntary choices”

It appears as if Mr. Braid is not only ignoring his constituents on this issue but also the thinking and counsel of his boss, Prime Minister Harper. Harper, in a post-budget comment said, “Our government does not believe in forcing Canadians into a single, compulsory one-size-fits-all approach. That’s why we give people options, voluntary choices to help us save …. What we will not suggest is raising taxes on workers that they don’t want to pay and claiming it is, quote, for their own good, and then hitting small businesses with tax hikes that small business cannot afford to pay.” That’s a pretty clear direction: “… give people options” and “voluntary choices’ that do not cause “tax hikes.”

Well, that’s exactly what I want to discuss with Mr. Braid – how life settlements can offer seniors a valid option for accessing greater value in their policies if and when they need it rather than relying on taxpayer money. But his lack of response suggests that “options,” “voluntary choices” and open discussion are not his idea of collaboration.

To lead or avoid change?

Perhaps Mr. Braid might consider the words that former Conservative Prime Minster, Brian Mulroney wrote this week (May 4, 2015) in a Globe and Mail article. Mulroney, speaking of leaders, said, “they must be ready to endure the attacks that often accompany profound or controversial change, while they await the distant and compelling sounds of a verdict that only history and a more reflective nation can render in the fullness of time.” Will Mr. Braid choose to lead or avoid?

In Mr. Braid’s own words

On November 18, 2014, Mr. Braid introduced Donald Gulioen, CEO Manulife and Chair of the Canadian Life and Health Insurance Association (CLHIA), at an industry “Advocacy Day” in Ottawa as they celebrated the industry’s accomplishments (see previous blog below).

I was encouraged by Mr. Braid’s words when he said, “My community has deep roots in the insurance industry and I also have worked in the sector … so I have a good understanding of the important role that insurance companies play in providing security for Canadians and strengthening our national economy.” He added that the industry was “committed to enhancing the well being of families and communities across our great country. Today’s Advocacy Day provides an excellent opportunity to further collaborate on our shared goals.” Based on his views, I decided to open up a dialogue with Mr. Braid.

“Keep your friends close, but your enemies closer.” – Sun Tzu (and Michael Corleone, Godfather Part II)

Michael Corleone

Friends or enemies?

It has been several months and nothing from Mr. Braid and yet, when it comes to the best interests of seniors, I assume Mr. Braid and I are on the same side. My goal is to advocate for doing what is best for seniors but I have no idea what Mr. Braid’s ideas might be concerning the “well being” of more than a million Canadian seniors in need. What I do know, from evidence around the world, is that life settlements are of significant financial benefit to seniors.

I sent him a copy of my book, Why Are Seniors Worth More Dead Than Alive? and other documentation regarding seniors’ financial plight and the potential of life settlements, so I know he has lots of information for a dialogue. But guess what? As I continue to distribute information via my blog, Mr. Braid has “unsubscribed.” Obviously, his concept of collaboration is different than mine, and I’ll bet different from what voters consider collaboration.

I expected Mr. Braid, Chair of his Party’s insurance caucus, to lead an in depth discussion on the merits of life settlements, not opt to avoid my questions. However, I suspect he thinks life settlements are a “controversial change” and that if he was to engage in a conversation, he might, as Brian Mulroney says, have to “endure the attacks” of his friends and supporters in the life insurance industry. That’s unfortunate – for his constituents and Canadian seniors everywhere.

My latest email to Mr. Braid

Mr. Braid, during the past few months I have delivered to you well researched evidence of an egregious disservice being perpetrated on millions of Canadian seniors, (read voters). You have not only ignored my material but elected to unsubscribe to further information. I shall continue to advocate for these seniors, most of who desperately need these funds to improve quality of life and perhaps remove many from government subsidies. A number of years ago, Tory MP Frank Sheehan, Chair of a legislative committee appointed to look at the matter, when questioned by noted columnist James Daw as to why nothing has happened on this subject responded, “The government’s legislative agenda is too busy. We just can’t free up the market without giving thought to the potential for abuse.” Fair enough!

Do you not think that more than 15 years is enough time for your party Mr. Braid? Who are we considering here, seniors or life insurance companies?

That is the question I will be asking the numerous seniors groups, (voters?) inviting me to appear before their various chapters during the coming months.

I shall be pleased to discuss with you!

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April 27, 2015 by Leonard Goodman

Outliving your money and government inertia

A grave secret: Life settlements were recommended by the Ontario Government 15 years ago – and they’re still a dead issue

Some gravestones are so old you can no longer read the inscription and yet, they stand as sentinels of history, so we don’t forget. Unfortunately, we have no such markers for government inactivity – of promises made, promises forgotten.

1994, 1995, 1997, 2000: The forgotten years for two million Ontario seniors

These years are when documented promises where made to our aging population and yet, inexplicably, “somebody” forgot to do anything about those promises. Was it a lack of political will? Or civil service incompetence? Either way, instead of having a viable and well-regulated life settlement industry in Ontario today (and Canada), we have a graveyard of empty promises buried under bureaucracy, incompetence and perhaps malfeasance.

A little background

Life settlements are some times referred to as viaticals and many people use the term interchangeabley, but they are, in fact, different. However, they have a common purpose: Allowing people who own life insurance to access the value in their policy before they die. And with life settlements that value is almost always more than the cash surrender value offered by the life insurance company.

In the case of viaticals, they originated in the 1980s during the HIV epidemic and were transacted so that policy owners who were terminally ill could access much needed money in their policy, often to help pay medical expenses.
Life settlements grew out of the realization that there was an inherent benefit for owners of life insurance if they could access the maximum value in their policy if they needed money before they died. It made sense to have a means to access the hard earned savings they had sunk into their policy and receive fair market value for their asset.
Over the past two decades the value of life settlements to policy owners has proven invaluable, around the world. Today, in the United States alone, life settlements are estimated to pay out $140 billion in 2015, in a well-regulated secondary market. But not in Canada.

The evidence is in

There is no shortage of documentation to show that the Mike Harris Conservative Government accepted the merits of a well-regulated life settlement industry (called viatical settlements at the time) and recommended going forward.

I haven’t spoken to Mike Harris but I am sure he meant, on behalf of Ontarian seniors, going forward before 2015.

Here’s some of the documentation:

1994: A reporter, James Daw,* wrote about activity as far back as 1994 and said, “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.” And yet, in the same article, Tory MPP, Frank Sheehan, who chaired a committee on this issue, said, “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 think about it? *On March 3, 2015, Finance Minister Charles 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. Let’s hope he is now well aware of the irresponsible, insidious delays and that he demands that the offensive sabotaging of government process is rectified. The intent of the government is obvious and the saboteurs are just as obvious (see year 2000 below).
1995: An exemption to section 115 of the Insurance Act was applied for but did not succeed; however, the committee recommended that the Ministry of Finance look further into changing the Insurance Act. Nobody looked and nothing changed.
1997: Living Benefits and Viatical Settlements in Ontario is a feasibility report of April, 1997, which recommended, in part, 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.” The government intent is clear.
2000: Bill 119 of the “Red Tape Reduction Act of 2000, Schedule G: Schedule G (if you can find it. It’s a little blurb in the midst of hundreds of pages) sets out a mechanism whereby a viatical industry in Ontario would be made legal if a licensing scheme 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.” 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. 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. That was almost 15 years ago. So much for good intentions when they get buried in a bad process.

It is the responsibility of the Financial Services Commission of Ontario (FSCO), under the Ministry of Finance, to oversee and act on anything related to life insurance, but FSCO appears to be a quicksand of incompetence and a massive bottleneck that is blocking the improvement of Ontario seniors’ financial well being.

Seniors, here lies your money – stuck in a hen house influenced by insurance companies

Somebody in the FSCO hen house is selling somebody a “bill of goods” that is not good for seniors. And it’s got something to do with the foxes – in this case, the insurance companies and their lobby. Because someone in the “hen house” has been sitting on what could be a golden egg for seniors for 15 years. FSCO has not yet done the right thing and the likely excuse will probably be related to the insurance industry not yet having provided “comments” on the government recommendations and intentions in 2000. Or some other irrational excuse.

Where’s the evidence?

It’s buried in the fine print. Schedule G represents typical legislative fine print and it seems as if only the committee and the CLHIA were aware of it. Also, the only delegation to the committee was made by Mark Daniels of CLHIA. That’s a little one sided. Who was advocating for seniors? Why was the Canadian Association of Retired People (CARP) not there? Why were representatives of Canada’s financial planners (Advocis) not looking out for the best interests of their customers, seniors? It was a stacked deck and there was no serious interest in furthering a life settlement industry that could significantly assist financially struggling seniors and would move money from insurance company balance sheets into seniors’ bank accounts. That is the crux of the issue.

Why else would FSCO take no action in 15 years? From an Ontario seniors’ perspective that is beyond incompetence and knee-deep in malfeasance.

2014 Auditor General’s Report

Bonnie Lysyk, Auditor General of Ontario, Sept. 2013

In 2014, the Ontario Auditor General’s report (Chapter 3, Section 3.03), strongly criticized FSCO’s performance and addressed their lack of oversight, supervision and control of its own hen house. And yet, there is no mention of section 115 of the Insurance Act. It would appear that the oversight of the overseers remains an egregious lack of foresight for the financial needs of seniors, despite the fact that government has been trying for two decades to do something. The question is: Are the inmates running the hen house or is it their “friends” the foxes?

In the Auditor General’s report it is suggested that the insurance industry might consider some form of self-regulation because FSCO is perhaps too bureaucratic – ya’ think?. And get this. The self-regulating organization (SRO) would be overseen by FSCO, which, in turn, would be overseen by the Auditor General. And guess who might be a potential SRO? Advocis, the Financial Planning Association of Canada, an association directly tied to insurance companies. So the foxes not only get to stay in the hen house, they get to self-regulate it. Geez, perhaps we should rename it, FIASCO.

Advocacy

Enough! The lack of advocacy for seniors on this most important financial issue is blatantly obvious. We don’t need anymore evidence to demonstrate that the current batch of self-proclaimed advocacy groups – CARP, Advocis, CLHIA – have little to no interest in discussing, analyzing or “commenting” on the potential benefits of life settlements for seniors, even in the face of the good intentions of successive governments (Conservative and Liberal). I’ve said it before, and I’ll say it again, it is shameful. The opposite of a fair and just society.

The Life Settlement Association of Canada (LISAC) has been established to advocate on behalf of Canadian seniors on this issue, but we also need political will within government – advocates – who will override FSCO and its lobbyists and stop the perversion of the process, and justice. It requires strong voices at the Ministry of Finance, the Ministry Responsible for Seniors Affairs, the Ministry of Health and the Auditor General of Ontario.

After two decades, the time is now!

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April 20, 2015 by Leonard Goodman

The elephant in the room for Canadian seniors …

Why is no one talking about a great source of cash for seniors – life settlements?

Over 600,000 Canadian seniors are living in poverty. Another 600,000 are still in the workforce. Many more are struggling financially. And the government and advocacy groups like the Canadian Association of Retired People (CARP) seem to be scrambling to help them. And yet, no one is talking about an asset class that belongs to millions of seniors who own a life insurance policy – life settlements.

Four times the cash value

For those of you who are not aware of the elephant in the room – life settlements – let me briefly explain.

A life settlement pertains to the sale of an unneeded in force life insurance policy for an amount that is more than the policy’s cash surrender value but less than its death benefit. A study by the London Business School of over 9,000 life insurance policies that had been transacted as life settlements showed that, on average, those polices received more than four times the cash value that they would have received as cash surrender value from the insurance companies. And, of course, many term policies would have received nothing.

The elephant

The problem is that life settlements are not available to Canadian seniors. And that’s an egregious oversight by governments and advocacy groups.

Pre-election budget to benefit seniors

Worse, no one is talking to seniors about the financial upside that life settlements could offer them. In an April 17, 2015 Globe and Mail article by Bill Curry, Pre-election budget to benefit seniors, including relaxation of RRIF rules, there is a lot of talk and hope about new budget measures – and that is good – but it is obvious that life settlements are not part of the conversation – yet.

Why?

In a word, ignorance. Governments are either uninformed or misinformed and abdicating their responsibility to seniors. And advocacy groups like CARP and the Financial Planners Association of Canada (Advocis) are not acting in the best interests of their members by ignoring the benefits life settlements can offer seniors.

Why are we keeping seniors in the dark?

Where do seniors go for honesty?

Seniors are kept in the dark, having no idea what life settlements are about or how they could benefit from them. And the insurance companies intend to keep it that way as long as possible.

Don’t get me wrong. Life insurance and life insurance companies are very important to over 21 million Canadians and I have been proudly affiliated with the industry for over fifty years. Life insurance companies provide a valuable service and do many good things – except on this issue of life settlements. On this, they are failing their customers. They are serving their own self-interests, not those of their customers, their representatives (financial planners and brokers), their shareholders or their country.

If seniors have heard anything about life settlements from their insurer or financial planner or broker it is probably erroneous and misleading information about how life settlements are a “serious risk” (see CLHIA lawyer letter below and my response). That is nothing but propaganda and spin. It only benefits the insurance companies and deprives policy owners of their right to receive fair market value for an asset they own – their life insurance policy. I have covered all the fundamentals about this in my book, Why Are Canadian Seniors Worth More Dead Than Alive?, and numerous blogs and media coverage (see Media).

The media?

The Canadian media have ignored this issue for years. They too are either ignorant of the facts or uninspired to dig into them. This is an example of where a little investigative journalism is needed. Or as Pulitzer-Prize journalist, Seymour Hersh says, “Our job is to find out for ourselves, our job is to go beyond the debate and find out who’s right and whose wrong about issues. That doesn’t happen enough.” And I, as an advocate for Canadian seniors, say that there’s no debate in the media about life settlements. It is not happening and yet, it would go a long way in serving the public interest, especially millions of seniors in need of financial help, now, not after they’re dead.

Around the world, well-regulated life settlement industries are providing billions of dollars to seniors, which in turn streams money into the economy and relieves the cost of government programs. As I have said before, it is a win-win-win.

Instead, it remains the elephant in the room for Canadian seniors.

Opportunity – it’s election time

We all know that the one time elected officials pay extra attention is during election campaigns so now is the time to bring out the elephant. And seniors can bring a large elephant to the ballot box. As Bill Curry points out, 75 per cent of voters aged 65 to 74 cast ballots in the 2011 election.

It’s time to ask every candidate, and every MPP – election or no election – where they stand on life settlements. And politicians like Peter Braid, MP in the Kitchener-Waterloo riding where many insurance companies reside, should have answers. He used to be in the insurance business and is head of the Conservative’s insurance caucus. I intend to see him at some all-candidates meetings because he has yet to respond to any of my correspondence and questions. Also, he “unsubscribed” from this blog, which I expect will mean he remains uninformed about how life settlements could help his senior constituents.

Advocacy?

Of course CARP advocates for seniors and their VP for advocacy, Susan Eng is out front talking to government officials and the media about all they are doing for Canada’s aging-population. According to Bill Curry’s report, Ms. Eng said her preference would be to get rid of the RRIF rules altogether, but a softening of the withdrawal rates would be an improvement over the status quo.

Question for Ms. Eng

I ask Ms. Eng, again: Why are you not advocating “to get rid of” the insidious regulations in provincial legislation that prevent seniors from accessing the fair market value for an asset they already own. And the recent Ontario election would have been a great opportunity to address this issue because Premier Wynne has said the financial problems for seniors is becoming a huge economic burden. But nothing on life settlements from CARP. Ms. Eng is quoted in the article:

“Seniors are really clear-headed about this now (RIFFs). It used be you could say the word ‘seniors’ in your announcement and they’re all for you … There’s going to be no chance you can get away with just saying: ‘We love seniors.'”

This raises a similar question: Why does CARP’s advocacy not include pursuing changes in the regulations so seniors could receive increased cash value through life settlements? Perhaps Ms. Eng thinks she can “get away with just saying: ‘We love seniors'” and ignore the elephant in the room.

Seniors need to take this issue to their CARP membership meetings, and the ballot box, even if their advocates won’t.

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