Ottawa’s new finance minister Joe Oliver is already drawing praise from one insurer, following the tabling of Bill C-31 into the 2014 Federal Budget – seen as a positive step towards implementing a framework for P&C insurance demutualization.
“The ICA amendments signal that we are nearing the completion of a long and complex process of developing a framework for demutualization,” said John Bowey, chair of Economical’s special committee on demutualization. “We have actively participated in that process since it began and view the proposed legislative amendments as a welcome sign of progress.”
The Bill includes amendments to the Insurance Companies Act (Canada) (ICA) that are required to broaden the Governor in Council’s authority to make regulations under the act.
These powers will support the eventual implementation of the regulations that are needed to allow federally regulated mutual property and casualty (P&C) insurance companies to demutualize.
As indicated in the February Budget announcement, the legislative and regulatory changes the Department of Finance intends to introduce will be aimed at establishing a P&C demutualization framework that “provides for an orderly and transparent process and ensures that policyholders are treated fairly and equitably,” according to the Finance Minister’s office.
The proposed amendments to the ICA indicate that the courts may play a formal role in the eventual demutualization framework, although the ultimate nature and scope of that role will not be known until draft regulations are released. (contintued.)
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Once the Budget implementation bill is passed and enacted, the next step will be for the Department of Finance to release draft demutualization regulations, which are expected to be subject to a public consultation period before coming into force.
At that point, according to the Economical, its board of directors will be in a position to determine whether demutualization within the final regulatory framework would be in the best interests of the company.
