Demutualization For P&C Companies: Here's What You Need To Know

In February, 2015 the Department of Finance released the draft regulations dealing with the demutualization of Canadian property and casualty mutual insurance companies ("P&C insurers"). There are two sets of regulations: one dealing with mutual companies having only mutual policyholders and one dealing with mutual companies that have mutual policyholders and non-mutual policyholders. One is a mutual policyholder if he or she, either by the company's by-laws or the terms of the policy, have a right to vote at meetings called by the company. All other policyholders are considered non-mutual policyholders or cash policyholders.

Some Background

Demutualization means a mutual company will convert into a typical stock company with shareholders. Mutual insurance companies that sell life insurance and annuities have been able to convert into a stock company since 1999. To date,  P&C insurers have been unable to demutualize as the governing legislation did not permit it.