NDP wants explanation for insurance regulation changes

The Saskatchewan NDP says the provincial government must come clean about its “surprising” decision to make a regulatory change that could affect the outcome of a multi-million-dollar civil case after being lobbied by a major insurance company at the centre of the claim while it was before a court.

The provincial cabinet’s decision to quietly change insurance regulations at the centre of the case raises questions about timing, process and an apparent lack of transparency, Opposition Justice Critic Nicole Sarauer said.

“I think they need to explain why they decided to put forward this regulation (change) when they did, why they didn’t wait until after the civil suit,” Sarauer said. While the changes may have been necessary, the timing remains troubling, she added.

“The government needs to be more transparent and open about what happened here. I think it’s starting to raise a lot of concerns, I think it’s starting to raise a lot of flags, and I don’t think short, terse statements by the minister are alleviating those concerns.”

The case in question will test whether a group of investors has the right to continue collecting a guaranteed minimum interest rate from a set of universal life-insurance policies with no cap on contributions. Some of the policies were purchased in Saskatchewan.

The investors insist the terms of the insurance contracts allow them to do exactly that. The three insurance companies involved, on the other hand, maintain that the policies were not intended to be used that way and that the practice could ultimately bankrupt them.

Justice Brian Scherman reserved his decision after the case went to trial at Saskatoon Court of Queen’s Bench in September. Before he could deliver a judgment, the provincial cabinet approved new regulations aimed at closing the loophole discovered by the investors.

Those changes came three days after one of the insurance companies involved, Manufacturers Life Insurance Co., disclosed in the province’s lobbyist registry that it lobbied Premier Scott Moe and Attorney General Don Morgan on insurance regulations.

The insurance giant has declined to provide specifics of its lobbying activities, including when the meetings took place.

All of the parties involved were back in court last month so the three insurance companies could argue that the new regulations should be applied retroactively to the policies in question, ending the investors’ ability to make unlimited contributions.

Scherman again reserved judgment. No date for either decision has been set.

The government did not publicize its decision at the time except in an order in council. The three-page cabinet order does not explain the reasoning for the changes or mention that the regulations were at the centre of an ongoing trial.

Morgan, responding to questions from the Saskatoon Starphoenix, said in a prepared statement that he was aware of the litigation at the time, and that he ordered the changes because of the “public interest” in protecting both policy holders and insurers.

John Whyte, a constitutional lawyer and former Saskatchewan Deputy Attorney General, said this week that political interference in civil cases is only justified when it serves the broad public interest and is done publicly.

“Just as a matter of good government, if you’re going to interfere in the course of civil liability in this direct way, you’d better state what the compelling public purpose is for doing so … Otherwise, people suspect the worst,” Whyte said.

Lawyers for the investors have said the changes are a “desperate attempt” by the insurers to have the government rescue them from unfavourable contracts, while one of the companies’ lawyers said the new rules must be retroactive to ensure the “mischief ” doesn’t continue.

Echoing Whyte’s comment, Sarauer said the government could likely have avoided raising red flags by issuing a news release explaining its decision to change the regulations and its reasons for doing so at the time.

“This is a government that has had a habit of picking winners and losers … I would say that this certainly raises some concerns that are similar, and the way that this has been handled by the government and the timing is doing nothing to alleviate those concerns.”