When the words of Winston Churchill are being quoted at an annual general meeting, you know it has been a long, hard-fought battle.
“The beginning was about four years ago, when the board determined that the company needed to gain greater access to the capital markets,” said John Bowey, chair of the board of directors’ special committee on demutualization for
Economical Insurance, who yesterday addressed the company’s annual general meeting in Waterloo, Ont.
“To quote Churchill, ‘This is not the end. It is not even the beginning of the end. But it may, perhaps, be the end of the beginning.’”
Bowey was referring to Bill C-31 receiving royal assent recently, which provided amendments to the Insurance Companies Act and broadening the Governor in Council’s authority to make regulations under the act – particularly, allowing a framework to be created to go forward with P&C insurance demutualization.
And although Bowey does see a light at the end of the demutualization tunnel, there is still a journey ahead yet to be traveled.
“There is still a lot we don’t know about our path to demutualization,” said Bowey, “but at least the direction is becoming somewhat clearer.”
Bowey said that although it isn’t yet clear if the summer break in Ottawa would have an impact on the timing, the board will soon have the details of the new regulatory framework.
“We will be in a position to decide whether it is still in the best interests of the company to proceed with demutualization within that framework,” said Bowey. “At this stage, we certainly believe it should be.”
Bowey did touch on the opposition to demutualization that has been at times quite vociferous from within the industry – saying that “squabble over who gets what” obscured the true purpose of demutualization. (continued.)
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“It has been an uphill struggle since day one and continues to be,” said Bowey. “For example, Karen Gavan recently appeared before the Senate Banking Trade and Commerce Committee opposite three other organizations stridently opposed to demutualization or narrow benefit sharing. Coming out of those hearings were comments that echoed the views of the opponents of demutualization – restricted sharing of benefits was unfair and unjustifiable.
“From our perspective, these comments sensationalized an outdated critique of demutualization. They ignored what we alerted you to in late 2012, that the Department of Finance was looking for what we have called ‘broader sharing’ – that is, a distribution of the financial benefits of demutualization to non-mutual policyholders as well as mutual policyholders.”
