Chapter 12

NonbankFinance

2005 Pearson Education Canada Inc.

Market Share of Financial Intermediaries

2005 Pearson Education 12-2

Insurance Companies

LifeInsuranceCompanies
1. RegulatedbytheOSFIandtheCanadianLifeand
HealthInsuranceCompensationCorporation
(CompCorp)
2. Holdilliquidlongtermassets
Property&CasualtyInsuranceCompanies
1. RegulatedbytheOSFIandthePropertyand
CasualtyInsuranceCompensationCorporation
(PACIC)
2. Holdmoreliquidassets

2005 Pearson Education 12-3

Balance Sheet of Life Insurance
Companies

2005 Pearson Education 12-4

Balance Sheet of P&C Insurance
Companies

2005 Pearson Education 12-5

Insurance Management

1. Screening
2. Risk-based premiums
3. Restrictive provisions
4. Prevention of fraud
5. Cancellation of insurance
6. Deductibles
7. Coinsurance
8. Limits on amounts of insurance

2005 Pearson Education 12-6

Other Institutions

Pension Funds
1. Rapid growth: encouraged by tax policy
2. Bigger role in stock market
3. Problem of underfunding
4. Private plans
5. Public plans
A. Social Security
B. CPP and QPP
Finance Companies
1. Minimal regulation by provinces
2. Rapid growth
3. Three types:
A. Sales finance companies
B. Consumer finance companies
C. Business finance companies
2005 Pearson Education 12-7
Balance Sheet of Non-Depository
Credit Intermediaries

2005 Pearson Education 12-8

Other Institutions
MutualFunds
1. Regulatedbyavarietyofagencies,includingtheOSFI
2. Openendvs.closedend
3. Loadvsnoload
4. MoneyMarketMutualFunds
GovernmentFinancialIntermediation
1. CrownFinanceCompanies:
CMHC,FCC,EDC,BDC
2. Moralhazardproblemofgovernmentloanguarantees
SecuritiesMarketInstitutions
1. InvestmentBanks
2. SecuritiesBrokersandDealers
3. OrganizedExchanges
4. Allareregulatedbyprovincialsecuritiescommissions

2005 Pearson Education 12-9