First step in implementing a framework for P&C insurance demutualizations
WATERLOO, ON, March 31, 2014 /CNW/ - Economical Insurance today welcomed an important step in its efforts to demutualize, as Minister of Finance Joe Oliver has tabled Bill C-31 to implement the 2014 Federal Budget.
The Bill includes amendments to the Insurance Companies Act (Canada) (ICA) that are required to broaden the Governor in Council's authority to make regulations under the act. These powers will support the eventual implementation of the regulations that are needed to allow federally regulated mutual property and casualty (P&C) insurance companies to demutualize. Details of the Budget's implementation are available on the Department of Finance's website at http://www.fin.gc.ca/fin-eng.asp.
As indicated in the February Budget announcement, the legislative and regulatory changes the Department of Finance intends to introduce will be aimed at establishing a P&C demutualization framework that "provides for an orderly and transparent process and ensures that policyholders are treated fairly and equitably." The proposed amendments to the ICA indicate that the courts may play a formal role in the eventual demutualization framework, although the ultimate nature and scope of that role will not be known until draft regulations are released.
"The ICA amendments signal that we are nearing the completion of a long and complex process of developing a framework for demutualization," said John Bowey, chair of Economical's special committee on demutualization. "We have actively participated in that process since it began and view the proposed legislative amendments as a welcome sign of progress."
Once the Budget implementation bill is passed and enacted, the next step will be for the Department of Finance to release draft demutualization regulations, which are expected to be subject to a public consultation period before coming into force. At that point, Economical's board of directors will be in a position to determine whether demutualization within the final regulatory framework would be in the best interests of the company.
Economical will continue to provide regular updates on the process and stakeholders are encouraged to visit the company's website, www.economicalinsurance.com for information.
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Founded in 1871, Economical Insurance is one of Canada's leading property and casualty insurers, with $1.9 billion in annual premium volume and $5.1 billion in assets as at December 31, 2013. Based in Waterloo, this Canadian-owned and operated group services the insurance needs of more than one million customers across the country. In 2010, Economical announced its decision to become the first federally-regulated mutual property and casualty insurance company to pursue demutualization. Economical Insurance conducts business under the following brands: Economical Insurance, Economical, Western General, Economical Select, Perth Insurance, Family Insurance Solutions, Federation Insurance and Economical Financial.
SOURCE: Economical Insurance
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