What is demutualization?

Demutualization is when a mutual company - like Economical - converts to a share company.

Right now, Economical is a mutual company. Unlike most companies which are share companies, mutual companies do not have shareholders who own shares of the company. Demutualization is the process where a mutual company converts into a company with shareholders. We will continue to provide home and auto insurance for personal and business needs, but after demutualization we will no longer have mutual policyholders and our shareholders will have governance rights.

We're proud of our rich history and are deeply rooted in the communities we serve. And while we stand strong, we never stand still. We're excited at the prospect of becoming the first national P&C insurance company in Canada to demutualize. This is an opportunity for our policyholders to join in our future.

What is the process for demutualizing?

The process to demutualize is set out in regulations published by the federal Department of Finance. As a P&C insurance company with both mutual and non-mutual policyholders, the regulatory process we have to follow is far more complex than any other Canadian demutualizations before us. Here is a comparison of how our demutualization contrasts with the demutualization of Canadian life insurance companies.

Our demutualization has four phases:


Board decision

The Economical Board of Directors initiates the demutualization process on November 3, 2015.

First special meeting

Eligible mutual policyholders voted in favour to negotiate with eligible non-mutual policyholders on allocation of benefits on December 14, 2015.

Policyholder committees

On June 26, 2018, Economical announced it had submitted its conversion plan, a detailed document that outlines how the company will demutualize, to its principle regulator. The conversion plan includes the allocation of financial benefits negotiated by the policyholder committees.

Second special meeting

On March 20, 2019, eligible mutual policyholders overwhelmingly supported a change to the company by-laws to allow eligible non-mutual policyholders to vote at a third and final special meeting. This milestone moves Economical further towards its vision of being a top P&C insurance company in Canada.

Third special meeting

The conversion plan is sent to all eligible policyholders, who vote together to approve it at the third special meeting, which has not yet been scheduled. If this vote passes, Economical can then apply to the Minister of Finance for approval to demutualize. After receiving letters patent of conversion from the Minister, Economical will begin the initial public offering process.

If any of the above policyholder votes do not pass, the demutualization process ends. The Economical Board of Directors can also stop the demutualization process at any time before final approval from the Minister of Finance.

Here is a more detailed description of the four phase process of demutualization.

To read the regulations in full, visit the Government of Canada's website for federal laws. The regulations are called Mutual Property and Casualty Insurance Company with Non-mutual Policyholders Conversion Regulations.

Where is Economical in the process?

Our demutualization journey is a long and complex one. After over four years of in-depth consultation with the federal government, the regulations required to begin this journey were created.

We are proud of the achievements we have made to date, and are excited to continue moving forward and unlocking our full potential as a leading Canadian property and casualty insurer.

Below, you can learn more about the critical activities that we have had to complete in order to move to the next step of our demutualization process.

Where is Economical in the process? infographic

Hover over an activity on our critical path timeline to get more details

Department of Finance develops regulations

Department of Finance develops regulations

  • As regulations did not exist for a P&C insurance company to demutualize, the federal Department of Finance first had to create the regulations
  • Economical actively contributed to the development of the regulations, which were enacted shortly prior to a federal election that resulted in a new governing party
  • The regulations development process include two formal consultation periods over a period of four years
OSFI drafts Instruction Guide

OSFI drafts Instruction Guide

  • OSFI drafts an Instruction Guide detailing the regulatory requirements for a demutualization, OSFI makes a Ruling on who is eligible
  • OSFI advises that they need to be kept informed during all stages of the process, even during steps that do not require regulatory approval
Economical engages OSFI

Economical engages OSFI

As described in the OSFI Guide, before the Board can approve starting demutualization:

  • Economical is required to meet with OSFI to present its plans for demutualization and provide OSFI the board resolution for its review
Economical prepares Notice

Economical prepares Notice

  • Economical prepares a notice to inform all eligible policyholders of demutualization in accordance with the regulations
  • This included determining the list of 630,000 eligible policyholders using the regulations, the Board resolution and the OSFI Ruling
OSFI reviews Notice of Intent

OSFI reviews Notice of Intent

  • OSFI reviews the Notice of Intent to Demutualize and provides authorization to Economical to send to all eligible policyholders
Economical mails 630,000 Notices

Economical mails 630,000 Notices

  • Economical prints and mails Notices to 630,000 eligible policyholders across Canada.
Economical applies to court

Economical applies to court

  • Economical is required to wait 30-45 days after mailing the Notice before applying to the court for an initial order to start the policyholder committee process
Court selects counsel and committee members

Court selects counsel and committee members

  • Court makes an initial order that lays out a reasonable timeline for legal counsel to apply and be appointed, an open process for committee member applications and interviews, and court selection of the policyholder committees
  • Throughout this period Economical posted the application process and all court documents on Join In Our Future to keep stakeholders informed
Policyholder committees negotiate allocation

Policyholder committees negotiate allocation

  • After agreeing to the appointment of independent experts, the two policyholder committees (representing eligible mutual and non-mutual policyholders) negotiate the allocation of benefits, with help from their counsel and advisors
  • Additional time was given by OSFI to allow the committees to finalize the details of the allocation and meet the regulatory deadline
  • To protect the negotiations, the Court issues a confidentiality order
OSFI reviews negotiated allocation

OSFI reviews negotiated allocation

  • Per the OSFI Instruction Guide, OSFI reviews the allocation before the committees could vote to approve it
Economical drafts conversion plan

Economical drafts conversion plan

  • Economical incorporates the allocation into a conversion plan – the legal document that outlines all steps of our demutualization
  • Five different actuarial and financial experts review the conversion plan and engage with Economical and each other to provide each of their professional opinions
  • After the committees approved the allocation, Economical finalizes and submits the conversion plan along with the expert opinions
OSFI reviews Special Meeting #2 materials

OSFI reviews Special Meeting #2 materials

  • OSFI conducts its review of special meeting materials, including the conversion plan, the information circular and the expert opinions, against the regulations and the criteria described in the Instruction Guide
  • Economical continues to engage with OSFI and to provide the materials and information as required by, and to support, OSFI’s review.
Economical calls Special Meeting #2

Economical calls Special Meeting #2

  • As soon as regulatory approval is received, Economical announces the second special meeting – held on March 20, 2019
  • Economical sends the approved information circular and proxy forms to all eligible mutual policyholders
Regulatory voting period

Regulatory voting period

  • Per the OSFI Instruction Guide, OSFI reviews the allocation before the committees could vote to approve it

For additional historical detail on our Demutualization process click here.

Am I eligible?

Eligibility depends on holding policies of Economical Mutual Insurance Company (including those sold by Family Insurance Solutions and Western General). Policies issued by Perth Insurance, Waterloo Insurance (Economical Select), Federation Insurance, or Missisquoi Insurance (Economical in Quebec) are not eligible.

There are two types of eligible policyholders: eligible mutual policyholders and eligible non-mutual policyholders.

  • An eligible mutual policyholder is a person who holds an Economical mutual policy if he or she held it on November 3, 2015 (the date the board decided to proceed with demutualization).
  • An eligible non-mutual policyholder is a person who holds an Economical non-mutual policy and has done so for the 12-month period ending on November 3, 2015, or meets the special circumstances defined below.

In Spring 2016, Economical sent a letter to each eligible policyholder that describes the demutualization process and states if the person is an eligible mutual policyholder or an eligible non-mutual policyholder.

If you have already received a letter from us, you can log in and set up your demutualization account.

What are the special circumstances to be an eligible non-mutual policyholder?

There are special circumstances where a person who holds a non-mutual policy will be eligible. These circumstances are fixed and cannot be changed or expanded.

  1. A person added to a policy that was already in force for at least 12 months

    A policyholder can be eligible even if they did not hold their policy for the entire 12-month period, so long as the policy they held on November 3, 2015 was at least 12-months old at the time.

    Example (illustration only): sometime during the year from November 4, 2014 to November 3, 2015, you bought a house with another person. The other person has had an existing Economical home policy for many years and you were added as a joint policyholder and held the policy on November 3, 2015. You and that other person are jointly eligible under this policy.

  2. A person who changed Economical policies part way through the 12-month period, so long as they changed to a "similar" policy

    A policyholder can be eligible even if they changed Economical policies during the 12-month period before November 3, 2015, so long as they held two or more "similar" Economical policies during that 12-month period which added up to 12 months of coverage.

    A policy is "similar" to another policy if both policies are personal property policies, both policies are auto policies or both policies are commercial property policies.

    Example (illustration only): you insured your house with Economical for years. Sometime during the year from November 4, 2014 to November 3, 2015 you moved to a different province and Economical replaced your existing policy with a new policy for the new home.

  3. 12-month policyholder with small gaps in coverage

    A policyholder can be eligible (including in the above circumstances) even if there are small gaps in coverage (max. 30 days). A gap in coverage occurs when none of the applicable policies are in force.

    Example (illustration only): you have insured your business with Economical for a few years. However, you were a little late with your renewal and as a result there was a small gap in coverage (less than 30 days).

Do I have to continue to hold an in force policy to remain eligible?

The negotiated allocation does not require an eligible policyholder to continue holding a policy to receive benefits. The allocation as drafted will treat the person as eligible, even if they now cancel or lapse their policy or otherwise are removed as a named insured from their policy.

Nevertheless, Economical cannot guarantee receipt of benefits in this or any circumstances. The demutualization process is still not complete. Ultimately, receipt of benefits depends on final approvals of the demutualization and the conversion plan (without change) by eligible policyholders in a policyholder vote and the Minister of Finance. Accordingly, eligible policyholders should consider holding their policy or policies throughout the process as it will ensure eligibility under demutualization for any benefits distribution.

Read more information about eligibility.

If you have questions or concerns about how eligibility applies to you, please contact us.

Why are you demutualizing?

What's in it for Economical?

It is our vision to be a leading property and casualty insurance company in Canada. To do that, we need to better compete with other insurance companies, many of which are share companies. After demutualization, as a widely-held company with common shares, we will have greater access to the capital that will allow us to make investments in the business, strategic acquisitions, and strengthen our financial position and flexibility.

What's in it for me?

Eligible Economical policyholders
Eligible policyholders have the unique chance to participate in the conversion of Economical to a widely-held company with common shares. As part of this, you may receive cash or shares in Economical.

Shareholders are usually entitled, among other things, to vote at meetings of shareholders and to receive dividends on their shares as declared by the board of directors. Shares can also be sold to investors, for example in an initial public offering, for cash.

The details about the distribution are contained in the information circular for the second special meeting. The value of Economical shares won't be known until much later in the process.

Demutualizing is a key strategy in fulfilling our vision of becoming a leading Canadian P&C insurance company. We're a strong, stable business that provides choice and dependable claims service to your customers. Successfully fulfilling our vision will enable us to remain a longstanding business partner.

Since 1871, Economical has been a strong Canadian business, providing rewarding career opportunities in the P&C insurance industry. Demutualization is a key strategy to achieve our vision of becoming a leading insurance company. Realizing this vision will enable us to stand the test of time and continue to be a great place to work.

Community members
Economical began in 1871 as a group of "neighbours helping neighbours" and has remained committed to being a responsible, reliable corporate citizen. Demutualizing is a key strategy in fulfilling our vision of becoming a leading Canadian insurance company. Realizing this vision will help us continue our legacy and be there for policyholders and our community members when they need us most in the years ahead.

In addition, a new charitable foundation is being established as part of Economical’s planned demutualization – the Economical Insurance Heritage Foundation. If demutualization is successful, the Foundation will receive a $100 million gift from the proceeds of the demutualization, as was negotiated by the policyholder committees as part of their agreement on financial benefits.

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