The Department of Finance Canada has wasted no time launching its anticipated public consultation on the demutualization of Canadian property and casualty insurance companies, setting the deadline for submissions on July 31, 2011.
The Finance Department committed to establishing regulations for the demutualization of a Canadian P&C insurance company in its budget, released on June 6. The government officially launched public consultations on June 30.
The proposed regulatory framework is a required step before The Economical Mutual Insurance Company may proceed with its plan to demutualize.
Assuming mutual policyholders approve the company's plan, The Economical would be the first Canadian property and casualty insurance company to demutualize under the Canadian Insurance Companies Act.
But the company and its mutual policyholders must first wait until the federal government establishes a regulatory framework for the demutualization of a P&C insurer. Currently, no such regulations exist.
Finance Minister Jim Flaherty has said publicly that no Canadian P&C insurer will be allowed to demutualize until regulations are in place. The public consultation is the first step in that process.
The timing of the public consultations was a wild card in whether the regulations might be in place by the end of 2011 or in early 2012. The company has said it would be ready to present a concrete proposal for demutualization to its mutual policyholders within six months after the introduction of the new regulations.
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