Insurance and Racism: Something for Everyone!

Feeling better this morning. Got a good idea for marketing my products to the brokers over the weekend. One of them was asking if there were any insurance companies that might give shares to policyholders. In fact, there are two, but only one of any real consequence. You see, a few years back the in thing was for mutual insurance companies (those owned by their policyholders, not by shareholders) to demutualize. This means an end to extra dividends (essentially, the excess profits of the firm) being paid out to policyholders, but, in lieu of that, they got shares in the new stock company. Thus, a policyholder in, say, Canada Life, might get $100 to $100,000 worth of stock in the company when it went public for free. Well, not really for free, as they don't get extra dividends, but everything else being equal (which it rarely is) if you have a choice between a mutual insurance company’s policy and a stock company's one it seems pretty obvious which one you might take: the one with the extra upside. As well, as mentioned, before demutualization excess profits went to the policy holders (in the form of dividends) and this meant (again, everything else being equal) that you could have higher returns with a mutual company.

So, why bother with stock companies? Well, for one, they often have a good deal of marketing and financial strength behind them (especially now since the plan of most stock insurance companies is either to: use their stock as currency to buy competitors or entice another to buy them). As well, not many people (even insurance agents) know the difference between the two; or they have strong loyalty or contractual obligations to sell one firm's products over another. Finally, most people buying policies are not exactly financial mavens and have little insight into the differences and even if they know the difference they may think: hey, there is no free lunch--this is too good to be true--and then they don't bother capitalizing on it.

Anyways, I will. Now to get to it.

UPDATE: This I read from my Google News this morning. Looks like 1 in 6 Canadians are victims of racism. Look at that! Not only are these people persecuted but they are also in the minority! Well, I guess the good news is that everyone who could be persecuted isn't...because, almost by definition in this multi-faceted country of ours, everyone is a minority--even WASPs like me!