Economical Insurance and Federation Insurance will discontinue writing insurance in Newfoundland and Labrador

Limited opportunities for profitable growth combined with a challenging regulatory environment were key considerations in Economical Insurance’s decision to stop writing insurance in Newfoundland and Labrador, the company has announced.

In a statement Friday, Waterloo, Ont.-based Economical announced that its decision to stop writing insurance in the province as of Oct. 1, 2014 follows a thorough review of the insurer’s business in Newfoundland and Labrador.

Existing policies with Economical Mutual Insurance Company or its subsidiary, Federation Insurance Company of Canada, will be honoured in full as per the coverage terms and conditions up to the expiry date stated on the policy, notes the statement from Economical, a Canadian-owned and operated company.

It is one of the country’s leading property and casualty insurers, with $1.9 billion in annual premium volume and $5.1 billion in assets as of Dec. 31, 2013.

Once the Economical or Federation policies of individual policyholders expire, “they will no longer have the option to buy insurance with Economical or Federation and are being advised to consult their insurance broker to find another insurance provider to meet their insurance needs for a seamless transition of their coverage,” the press release adds.

Economical further notes it is “actively supporting its broker partners to find alternate markets with other insurers serving the province.”

In 2010, Economical – which conducts business under Economical Insurance, Economical, Western General, Economical Select, Perth Insurance, Family Insurance Solutions, Federation Insurance and Economical Financial – announced its decision to become the first federally regulated mutual property and casualty insurance company to pursue demutualization.

In early March, Economical reported its plans for a new national processing centre in Kitchener, Ont. – scheduled to open this year – as part of the insurer’s new operating model.

Economical noted at the time that under the new model, the insurer will implement new technologies to automate processes, establish a new organization structure and aim to bring consistency to its processes. The changes are expected to enhance productivity, efficiency and effectiveness.

“Under our new operating model, we will enhance broker and customer experience, and will produce tangible cost savings that will support our future profitable growth,” Karen Gavan, Economical’s president and chief executive officer of Economical, said in a statement.