Below is a summary of how eligibility to participate in the demutualization of Economical Mutual Insurance Company ("Economical") under the Mutual Property and Casualty Insurance Company with Non-Mutual Policyholders Conversion Regulations (the "Demutualization Regulations") developed by the federal government. This summary is provided for general information purposes only and does not constitute legal, business, or other general advice.

In order to initiate the demutualization process, on November 3, 2015, the Board of Directors (the "Board") of Economical passed a resolution recommending demutualization (the "Initiating Board Resolution"). The date of the Initiating Board Resolution – November 3, 2015 – is the eligibility date for the currently proposed demutualization process. The Demutualization Regulations define who will be the eligible mutual policyholders and eligible non-mutual policyholders by reference to the eligibility date. As well, the Demutualization Regulations specify that only policyholders of the demutualizing company - in this case, Economical Mutual Insurance Company - will be eligible to participate in demutualization. These policies include Economical policies sold under the Family Insurance Solutions and Western General brands, but exclude policies issued by our subsidiaries. Eligible mutual and non-mutual policyholders are entitled to participate in the demutualization process.

Eligible Mutual and Non-Mutual Policyholders

According to the Demutualization Regulations, in the case of the currently proposed demutualization of Economical:

  • an eligible mutual policyholder is a person who holds an Economical mutual policy if they held it on November 3, 2015
  • an eligible non-mutual policyholder is
    • a person who holds an Economical non-mutual policy and has done so for the 12 months ending on November 3, 2015; or
    • a person who the Board has stated in the Initiating Board Resolution is to qualify as eligible non-mutual policyholders, as described below.

The Demutualization Regulations permit the Board to set out in the Initial Board Resolution other Economical non-mutual policyholders who are to qualify as eligible non-mutual policyholders. Exercising this authority, the Board specified that any person who is not otherwise an eligible policyholder shall qualify as an eligible non-mutual policyholder if

  1. such person held a policy on November 3, 2015 (the "Eligibility Date Policy"), and
    1. the Eligibility Date Policy had been in force throughout the entire 12-month period ending on November 3, 2015, with no gap in coverage during that 12-month period of more than 30 days; or
    2. held one or more policies that were Similar to the Eligibility Date Policy, which when taken together with the Eligibility Date Policy, had been in force throughout the entire 12-month period ending on November 3, 2015, with no gap in coverage during that 12-month period of more than 30 days; and
  2. in the event paragraph (a) of the definition of eligible non-mutual policyholder under the Regulations requires a policyholder to hold a policy after November 3, 2015 to remain an eligible policyholder, such person will have held the Eligibility Date Policy, or a combination of the Eligibility Date Policy and one or more policies issued by the company that are Similar to the Eligibility Date Policy, in force throughout the entire period from and including November 3, 2015, until and including such later date that is required for eligibility in paragraph (a) of the definition of eligible non-mutual policyholder under the Demutualization Regulations with no gap in coverage during that period of more than 30 days.

For greater clarity, for the purposes of the Initiating Board Resolution:

  1. a policy issued by the company is "Similar" to another policy issued by the company if both policies are personal property policies, both policies are auto policies or both policies are commercial property policies, regardless of whether one of the policies is a mutual policy;
  2. a gap in coverage occurs when none of the applicable policies are in force;
  3. a person held an Eligibility Date Policy if that person was a named insured on that policy on the date of this resolution, regardless of whether the person was listed as a named insured on that policy for the entire duration the policy was in force or any event after the date of this resolution;
  4. except for an Eligibility Date Policy, a person held a policy that is no longer in force if that person was a named insured on that policy on the last date that policy was in force, regardless of whether the person was listed as a named insured on that policy for the entire duration the policy was in force; and
  5. except for an Eligibility Date Policy, a person holds an in-force policy on a date if that person is a named insured on that policy on such date, regardless of whether the person was listed as a named insured on that policy for the entire duration the policy was in force.

The Board used the discretion provided under the Demutualization Regulations to include these as eligible non-mutual policyholders for reasons of fairness and equity.

Maintaining eligibility throughout the demutualization process

Based on guidance received from our primary regulator OSFI, Economical is required to treat a person as eligible in this demutualization process if he or she:

  1. held one or more policies on November 3, 2015, that met the criteria for eligibility, as described above; and
  2. held one or more of those same policies or similar policies on December 14, 2015.

This means that if a person was eligible on December 14, 2015, he or she will be treated as eligible for the remainder of the process. Eligible policyholders should be aware, however, that it is possible the demutualization process may become subject to legal challenges, which may include challenges to how eligibility is determined. Accordingly, if a policyholder is eligible, he or she should consider holding his or her policy or policies throughout the process as it will ensure eligibility under demutualization for any benefits distribution.

Back to Top