ECONOMICAL MUTUAL INSURANCE COMPANY MAKES SUBMISSION TO FEDERAL FINANCE COMMITTEE REGARDING CONSULTATION ON DEMUTUALIZATION FRAMEWORK FOR P&C INSURANCE COMPANIES
Economical Mutual Insurance Company made its submission to Finance Canada's consultation process regarding the establishment of a demutualization framework for Canadian property and casualty insurers. Please see below to review the covering letter by John Bowey, Chairman of the Special Committee, and click here to view or download the full submission.
I am writing in response to the above-referenced consultation paper released by the Department of Finance on June 30, 2011 (the "Consultation Paper"). As you know, Economical and its board of directors are committed to proceeding with the demutualization of Economical, and we therefore appreciate being given the opportunity to comment on the framework which will be established to allow property and casualty insurers to demutualize.
We have reproduced below each of the questions for consultation which were set out in the Consultation Paper, and beneath each of those questions we have provided our responses.
In summary, our principal conclusions are as follows:
- the policy objectives and demutualization process with respect to the demutualization of federal P&C mutuals should be essentially the same as those reflected in the Mutual Company (Life Insurance Conversion Regulations), which have proven to be robust and effective;
- mutual policyholders of federal P&C mutuals enjoy at least as strong ownership rights as participating policyholders of federal life mutuals and accordingly have exclusive rights to demutualization benefits, as did the participating policyholders of the demutualized federal life mutuals;
- holders of mutual (i.e. voting) policies are the only policyholders of a federal P&C mutual who should be entitled to vote on a demutualization and to receive demutualization benefits;
- permitting federal P&C mutuals to demutualize would affect so few companies and such a small percentage of the overall Canadian P&C industry that we do not believe there would be any material adverse impacts; and
- Economical needs to demutualize in order to compete more effectively over the long term with the large stock P&C companies that operate in Canada.
The Economical Insurance Group
Founded in 1871, The Economical Insurance Group® (TEIG®) is one of the largest property and casualty insurance companies in Canada, providing security and support for our customers and broker partners from coast to coast.
We make one simple promise to all of our customers: we'll be there when you need us most. When the unthinkable happens, you can count on TEIG to take care of the details so you can get on with your life. Our innovative insurance products are backed by professional, 24-hour emergency claims service so we're always available when you need us.
TEIG offers a wide range of personal, commercial, farm and surety products. Whether you're looking to insure your home, automobile, or business, we have you covered. We've developed innovative products that meet the demands of your busy lifestyle. All of our products are supported by a solid history, financial stability and fast, efficient service on every claim.
Contact your independent insurance broker for more information.
