Economical Insurance: Everything you need to know
|111 Westmount Road South, P.O. Box 2000, Waterloo Ontario N2J 4S4, Canada
|Gross written premiums
||$3 billion (2021)
||Personal, group, business, and farm insurance
||Rowan Saunders (president & CEO)
|Financial strength rating
A- (Excellent) A.M. Best
About Economical Insurance
Economical Insurance is a Canadian property and casualty (P&C) insurance company that serves more than a million people from coast to coast via its national broker force. The organization offers personal insurance (home and auto), group insurance, business insurance (commercial property, liability, commercial auto, and surety bonds), and farm insurance (general farm, dairy, poultry, and cash crop).
Economical Insurance is one of the brands under Definity Financial Corporation, which also include Sonnet (a digital insurance platform), Family Insurance Solutions (a distributor of personal insurance in British Columbia), and Petline Insurance (a pet health insurance company).
From a mutual history to a public future
Back in the late-19th century, when Kitchener was still known as Berlin, a group of concerned citizens got together to help their neighbours in times of need, and so, Economical Mutual Fire Insurance Company of Berlin was born, issuing its first policy on a house and barn in November 1871.
Over the coming decades, the company’s operations grew and its name was officially changed to The Economical Mutual Insurance Company. In 1937, Economical expanded into Quebec following its acquisition of Merchant’s Casualty, and later added Northwestern Mutual to its roster, while entering the Maritimes marketplace.
Fast forward to the 2000s, Economical announced a brand refresh with a new logo and tagline, before kicking off the demutualization process to convert the company from a mutual to a stock company in November 2015.
In 2019, the company reached a big milestone in the demutualization journey, after its team worked hard behind the scenes to prepare to go public – the proposed demutualization conversion plan was made public and became open to eligible stakeholders for comment and eventually for vote. On March 20, eligible mutual policyholders of Economical Insurance voted to continue with demutualization.
“Economical decided to pursue demutualization in order to better compete in our marketplace. We need a greater access to capital that will allow us to make strategic acquisitions, to make investments in innovation, and to strengthen our financial position and flexibility,” explained John Bowey, board chair of Definity and Economical’s former chairman of the special committee on demutualization.
“We’re the first P&C company in Canada to do this, under new regulations that the government had to create for us. No-one has ever done what we’re now doing. In 2015, the government enacted those regulations and the board decided to move forward with our demutualization process. It has been complex. It required the court to order the formation of committees to represent both eligible mutual policyholders and eligible cash policyholders, and then for those committees to negotiate the allocation of benefits from our demutualization.”
Sonnet and Vyne
The path to going public was paved with key initiatives to ensure that Economical would stay competitive in the insurance marketplace.
“We are a proudly Canadian P&C insurance company,” said Rowan Saunders, president and CEO of Economical Insurance. “For the majority of our history we’ve been a broker-based business. In recent years, Economical has been pursuing strategic initiatives in order to gain competitive advantage now and in the future. The journey we’ve pursued towards de-mutualization has been progressing concurrently with our progress to build the foundation required to be a successful public company.”
First off, the company launched Sonnet in 2016 as an online home and auto insurance company that, according to Saunders, is still the only fully-digital insurance experience available across Canada, as of March 2019. With innovative technology, advanced analytics, and simplified policy language in hand, the process of buying insurance is now much easier for customers, though it might also elicit some disruption fears among brokers, especially those in personal lines.
However, Economical’s investment into direct insurance doesn’t signal an end to its broker-based business. The insurer took its experiences from the creation and launch of Sonnet to craft Vyne, a platform that supports broker growth and communication with Economical.
“Vyne launched last year to more than 22,000 brokerages across Canada and it has been embraced by the broker community,” Saunders told Insurance Business. “Vyne streamlines broker workflows and makes doing business at Economical easy, which means it’s a significant growth engine for our business. After just a few months of being launched, we’ve seen the volume of policies through the Vyne platform oust all expectations.”
A focus on giving back is also part of Economical’s mission. In December 2018, its employees chose 13 community-based organizations that the insurer would be granting donations to as part of its annual charity program. Each organization received $2,500, and, since the program’s launch, the insurer has granted $157,500, which includes this year’s total of $32,500.
“Economical’s Choose Your Charity campaign shows that we’re stronger together when our employees give back to the communities supporting our brokers and customers,” said Economical Insurance senior vice president, chief human resources officer Brigid Pelino. “Each and every organization impacted through this annual campaign is making a difference in their community, and it’s an honour to contribute to their vital work.”
Recipients included the SickKids Foundation, Children’s Wish Foundation, Ottawa Food Bank, Hope for Wildlife Society, among many others.
Apart from this, Economical offers scholarships for students planning to take up a career in the insurance industry. These include:
- $50,000 in annual scholarships for students enrolled in insurance studies at Mohawk College, Conestoga College, Fanshawe College, Seneca College, MacEwan University, and BC Institute of Technology
- $25,000 in annual scholarships for students in actuarial science programs at the University of Waterloo and Concordia University
- $10,000 in annual bursaries to help deserving students in the Wilfrid Laurier University School of Business & Economics