for Canada's mutual insurance industry


History: farmingDid you know that the majority of Canadian farm mutual insurance companies were set up 100-150 years ago as a response to the lack of interest by foreign insurance companies to insure farms?

As we were then living in a rural economy, to encourage the formation of domestic insurers, legislation was introduced in Upper Canada in 1836 permitting the establishment of one farm mutual insurance company in each of the 20 districts in Upper Canada. At the time, the then created 20 mutual insurance companies were limited to insuring only in their particular district. In the 1850's, the Act was amended to permit the establishment of more farm mutual insurance companies. A total of 57 companies were created, of which 42 companies remain in operation in Ontario.

In Lower Canada, the movement started in 1852 when a group of farmers decided to pool their financial strength to mutually protect their properties. Hundreds of companies were created. As a result of numerous mergers over the years, there are now 19 mutual insurance companies operating in Quebec.

The development of farm mutual insurance companies in Western Canada paralleled the growth of farming and the development of farm communities in that region in the 1880's. Today, there are 8 farm mutual insurance companies in Western Canada; the largest of which are found in Manitoba and Saskatchewan.

It was in 1885 that the first mutual insurance company saw the light of day in Eastern Canada (P.E.I.), at a time when property insurance was still simply unavailable at reasonable prices to rural communities. Other mutuals were set up in Nova Scotia and in New Brunswick (beginning in 1904 and 1937 respectively). We now count 8 mutual insurance companies in Eastern Canada. 

Historic Premium Note of UndertakingIn the beginning, as a mutual insurance companies had very little reserves, they had to adopt the premium note system to guarantee their financial stability. Each policyholder had to sign a note for an amount in relation to the sum paid for the policy premium. In the event of financial difficulties, the company could call upon the policyholder for a proportion, or the total, of his note, depending on the need for money at that particular time. History demonstrates that companies very rarely had to call on the policyholder to pay anything on the note. In later years, companies built such a surplus that they could do away with the premium note system. Today, the surplus (policyholders equity) of farm mutual insurance companies is on average higher per $million of gross premium written than it is for stock companies.

The success of mutual insurance companies is attributed mostly to their community base. People perceive their local mutual insurance company as not only an opportunity to help each other but as a means of obtaining reliable insurance at reasonable costs. Further, their local base allow them to know the residents - which enable them to better underwrite the risks.

Consistent with their beginnings, the farm mutual insurance companies are headquartered in small communities and, therefore, maximize their employment in these communities. 

And  therefore ……..

CAMIC history

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