November 30, 2011 by Canadian Underwriter
Intact’s acquisition of AXA will have a larger impact on the Canadian property and casualty marketplace than if The Economical, Wawanesa Mutual and Gore Mutual were to all demutualize during the upcoming year, according to David A. Crozier, senior vice president of operations at The Economical Insurance Group.
Crozier spoke on the topic, ‘Forging a New Path in P&C: Demutualization,’ during the Insurance Institute’s At the Forefront Breakfast in Toronto.
Crozier was attempting to dispel the belief that The Economical’s impending demutualization would trigger a domino effect among other mutual insurers in the Canadian P&C marketplace.
Out of 223 Canadian P&C companies, only 10 are federally-regulated, Canadian-domiciled mutual insurance companies that fall under the Insurance Companies Act, Crozier said.
“To look at the demutualization mechanism’s scope of influence and application differently, by direct written premium, federally-regulated, Canadian-domiciled P&C mutuals bear approximately 9.3% market share,” Crozier said.
Of these 10 companies, three (Wawanesa, The Economical and Gore) hold an overwhelming majority of market share for affected companies – “nearly 93%, in fact,” Cozier said, “with the vast majority falling to the first two companies [Wawanesa and The Economical].”
Crozier said the marketplace impact of the demutualization mechanism would sometimes have to be evaluated in light of other more major developments in the industry.
“For example, Intact’s acquistion of AXA represents a larger shift in the Canadian P&C marketplace than if the three mutuals [Wawanesa, The Economical and Gore] all demutualized in the next year,” he said. “We have to put demutualization into perspective. Demutualization is just one thread of a much larger story.”