CompCorp increases coverage limits

(July 7, 2005) Following the lead of the Canada Deposit Insurance Corporation, CompCorp, which protects policyholders in the event of an insurance firm bankruptcy, has increased its coverage limits.

Accumulated values are now fully protected up to $100,000, CompCorp announced today, and for cash values, policyholders will receive at least 85% of their promised benefits. Below $60,000, CompCorp guarantees 100% protection.

Similarly, guaranteed amounts of segregated funds are protected up to 85% of promised benefits and 100% below $60,000.

The coverage increases were approved at CompCorp’s recent annual meeting and “reduce any potential consumer confusion about the protection offered in other financial services sectors,” CompCorp said in a statement.

“Financial advisors, brokers and insurance companies can recommend the best product to meet their clients’ needs without concern for the level of protection.”

“Providing appropriate coverage is essential for the protection of policyholders. This increase in coverage ensures that life and health insurance consumers are now better protected from devastating personal financial loss,” added CompCorp president Gordon Dunning. “We are committed to protecting Canadian policyholders’ benefits in the event their life insurance company fails.”

David Newman, president of the Canadian Federation of Independent Deposit Brokers, led a campaign to convince Ottawa to raise CDIC limits. That happened in this year’s federal budget, when those limits were bumped to $100,000 from $60,000. The budget was given royal assent last week.

Newman says he’s pleased that CompCorp has decided to follow suit. “I spoke with them little while ago and they said they would meet [CDIC’s move], they’ve just got a different type of approach than the federal government.”

“The limits needed to be higher, considering inflation and peoples’ reliance on savings and RRSPs,” he adds. “CompCorp is more in tune with the marketplace because they are part of the insurance industry and for the most part they are market-driven.”

Still, Newman says he’d like to see Ottawa go further and introduce automatic reviews for CDIC coverage and perhaps consider indexing the limits to inflation. “It’s such an arduous task to get anything through parliament. There should at least be some kind of review process.”

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com