Demutualization of Insurance Companies

The federal and provincial governments share jurisdiction over life and health, and property and casualty insurers. Federal supervision encompasses Canadian-owned insurers and branches of foreign companies. In general, the provinces regulated licensing and marketing, while OSFI conducts prudential reviews of the companies to determine their financial soundness. PACCIC and Assuris ensure that member companies' policies will be continued, within limits, and generally according to their terms, in the event of an insolvency.

This section of our Web site contains a wide range of publications and information relating specifically to domestic and foreign insurance companies. Listings of the federally regulated insurance companies in Canada can be found in the Who We Regulate section of this Web site.

Demutualization of Canadian Mutual Insurance Companies

Some mutually held insurance companies may choose to convert into stock companies; this process is known as demutualization.

Property and Casualty

In its 2014 Budget, the Federal Government announced that it would develop and consult on a proposed demutualization framework for federally regulated property and casualty mutual insurance companies (P&C Mutuals). To this end, draft regulations were published in the Canada Gazette on February 28, 2015.

The stated objectives of this proposed regulatory framework are to provide the P&C Mutuals with the ability to demutualize into a stock company through a process that is orderly and transparent, while ensuring that policyholders are treated fairly and equitably. While the decision to pursue demutualization is made by the P&C Mutual’s Board, the proposed regulatory framework empowers eligible policyholders with ultimate decision on whether to approve the conversion proposal.

As in the existing demutualization framework for federally regulated life insurers, OSFI would have a significant role in any demutualization process initiated by a P&C Mutual. Under the proposed regulatory framework for P&C Mutuals, OSFI’s primary role will entail:

  1. Authorizing the sending of notices of meetings to policyholders entitled to vote at the various meetings throughout the process, and approving the information that is to accompany such notices, with a view to ensuring that policyholders are able to make an informed and reasoned judgement with respect to the matter being voted upon.
  2. Reviewing the information provided in support of the P&C Mutual’s conversion proposal to ensure that the legislative and regulatory requirements have been satisfied and that the P&C Mutual will remain financially sound and able to meet its obligations to policyholders and other creditors following its conversion into a stock company.
  3. Providing the Minister of Finance with a recommendation regarding the P&C Mutual’s conversion proposal and its application for the issuance of letters patent of conversion.

OSFI intends to publish further guidance on the demutualization of P&C Mutuals after the proposed regulatory framework has been finalized and proclaimed in force.

In the interim, any comments or questions regarding the proposed regulatory framework for P&C Mutuals should be directed to the federal Department of Finance.

Once the Property and Casualty Regulations come into force, OSFI intends to provide guidance to the industry on the process of demutualization. For information on your insurance companies’ intentions, please contact them directly.

Life Insurance

Federal government legislation and regulations are already in place to allow Canada's mutual life insurance companies to demutualize.

Four life insurance companies have now completed the process of demutualization:

Eligible policyholders were asked by their company to vote on a conversion proposal. Close to the date of the vote, policyholders were provided with an information package that described the specific company proposal in detail. When policyholders approved, and regulatory approval was obtained, eligible policyholders became shareholders of their life insurance company. Policyholders' rights as customers remain unchanged - insurance coverage, policy values, premiums, and policy dividends are not affected by demutualization.

At the time of each company's demutualization, the company's participating account was restructured. All existing eligible participating policies were placed in a closed block within the account. The operations of the company's restructured participating account are governed by operating rules that are described in the policyholder information guide that was distributed to participating policyholders.

For more information about the demutualization of these insurance companies, please click on the hyperlinks above to contact each company, or contact OSFI: