REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the regulations.)
Issues
The Insurance Companies Act contemplates the demutualization of mutual life and property and casualty (P&C) insurance companies. Demutualization is the process by which a company governed by its mutual policyholders converts into a share-based company. The legislation requires that the details of a demutualization framework be set out in regulations. While demutualization regulations for life insurance companies have been in place since 1999 (Mutual Company (Life Insurance) Conversion Regulations), there are currently no regulations for P&C insurance companies.
Some federally regulated mutual P&C insurance companies have recently expressed an interest in demutualizing. Without P&C demutualization regulations, federally regulated mutual P&C insurance companies cannot demutualize.
Background
Mutual P&C companies engage in a number of business segments, including automobile, home, and commercial insurance. The broader P&C insurance sector consists of hundreds of companies and may offer insurance to Canadians nationwide; the federally regulated mutual P&C sector is narrow and consists of seven companies, most of which operate rurally and regionally. They are Wawanesa Mutual, Economical Insurance, Gore Mutual, Portage La Prairie Mutual, North Waterloo Farmers Mutual, Saskatchewan Mutual, and The Kings Mutual. In general, these companies are relatively small, ranging from approximately $20 million to $200 million in equity, although Wawanesa Mutual and Economical Insurance rank among the top 10 largest P&C insurers in Canada, each having over $1 billion in equity as of June 2014.
Canada Gazette – FEB 28, 2015
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