Here is some important news from Economical Insurance we wanted to share
with you. Economical Insurance is demutualizing. If you are an Economical
policy holder you may be entitled to a financial benefit. Please read
the attached press release for further information.
Released Tuesday, November 3, 2015
Economical is proceeding with the demutualization process — how are
your clients affected?
Please read this carefully as it contains eligibility information for
your clients
What’s new
Earlier today the Economical Board of Directors announced its decision
to proceed with the demutualization process within the regulatory framework
developed by the federal Department of Finance.
You can read the news release on our website
here.
Eligibility
Today’s news may bring on questions posed to you by your clients
holding Economical policies and many of them will have the opportunity
to participate in our demutualization as “eligible policyholders.”
The eligible policyholders will play an important role throughout the
demutualization process, including voting to approve the company’s
formal proposal to demutualize and to receive financial benefits at the
end of the process.
Most of your Economical clients are non-mutual policyholders. This means
that, in general, their eligibility requires that they hold a policy of
Economical and have done so for the 12-month period ending on November
3, 2015 (the date the board decided to proceed with demutualization).
In addition, the following groups of policyholders may qualify as eligible
non-mutual policyholders:
· a policyholder who held a policy that was at least 12 months old
on November 3, 2015 even if they themselves did not hold the policy for
those 12 months (e.g. a joint policyholder added to an existing policy)
· a policyholder who, for whatever reason, did not hold any one
policy that was 12 months old on November 3, 2015, but had held two or
more similar policies during that 12-month period which added up to 12
months of coverage (two policies are similar if they are both personal
property policies, both are auto policies or both are commercial policies)
· a policyholder who would have been eligible (including in the
above circumstances) but for gaps in coverage each up to 30 days
· a policyholder who has a combination of the above circumstances
However, a policyholder that was eligible on November 3, 2015 might still
lose their eligibility if their policy (and any similar policies) is cancelled
or lapses after November 3, 2015.
We have requested guidance from our primary regulator, the Office of the
Superintendent of Financial Institutions (OSFI), on whether policies must
be held past the board decision date in order for policyholders to remain
eligible. Once we have this guidance, you will receive more information
from us about eligibility. In the meantime, if it appears a policyholder
may be eligible and they do not want to affect that potential eligibility,
Economical recommends they consider maintaining their policy beyond November 3, 2015.
As part of the demutualization process, we will be sending a letter to
all policyholders describing the demutualization process and setting out
the criteria for determining eligibility. The letter will be sent some
time after the vote of eligible mutual policyholders (see below).
In the interim, you should
· Avoid any suggestion to clients that cancelling or lapsing their
policy will not affect eligibility.
· Direct any interested clients to Economical’s website on
demutualization (
www.joininourfuture.com).
Please note only persons holding policies issued by Economical Mutual
Insurance Company are eligible to participate in demutualization. This
includes include policies sold by Family Insurance Solutions Inc., or
under the Western General brand. On the other hand, policies issued by
our subsidiaries (Perth Insurance, Waterloo Insurance (Economical Select),
Federation Insurance or Missisquoi Insurance) are not taken into account
for eligibility.
Next steps
The next step will be a special meeting, where eligible mutual policyholders
will decide whether to continue with the demutualization process.
At this meeting, the eligible mutual policyholders will vote on whether
to negotiate the allocation of demutualization benefits with eligible
non-mutual policyholders. A positive vote at this meeting will trigger
the next phase of the demutualization process which will initiate the
involvement of hundreds of thousands of Economical’s policyholders.
The date of the meeting will be announced in the future.
Ensuring policyholder records are up-to-date
As we have said before, Economical will rely on its internal records to
determine which policyholders are eligible to participate in demutualization
and to determine entitlement for demutualization benefits. This is a significant
task and requires all information about policyholders to be up-to-date.
Otherwise, some policyholders may be inadvertently excluded from the process
or receive less than they would be eligible for.
Our broker partners play a critical role in ensuring we have accurate
and up-to-date information about their clients. Over the next few months,
and throughout the demutualization process, it will be vitally important
for brokers to update Economical with policy changes on a timely basis
– as soon as possible after the client makes the change. This will
help avoid confusion about eligibility and other inconveniences for your clients.
A new look and support for your clients
The Economical team remains committed to keeping stakeholders informed
throughout the demutualization process, and has launched a website where
you can direct your clients (
www.joininourfuture.com). This website provides information, updates, and access to demutualization-related
resources. It will be where we provide regular updates and stakeholders
are encouraged to visit frequently. Those interested can also sign up
to receive automated alerts when new information is posted.
In addition, we’ve prepared a short summary document with answers
to key questions and details on who to contact for more information. This
is an updated version from what we provided you in late August. Please
feel free to share it with your clients if you think it would help them.