Our History

Mutual insurance got its start following the great fire of London in 1666 and became established in North America in 1752. The British American Assurance Company, a stock company, was established as the first domestic insurer in 1833.

To encourage the formation of domestic insurers, the Governor of Upper Canada, Sir Francis Bond Head, introduced legislation in 1836 permitting the establishment of mutual companies. In the 1850s, the act was amended to permit additional mutual companies. As a result, many companies were organized during the 1850s and 1860s.

Through the late 1800s and early 1900s, the companies operated on an assessment basis. Each prospective member/policyholder was required to complete an application and sign it together with a "premium note." This was, in effect, a promissory note, promising to pay the signatory's share of any claims occurring during the term of the policy. In many cases, no premium was collected at the time of the application. Claims and other expenses were paid by levies on the premium note, in some cases, only at year-end.

A number of the companies continued to operate on the assessment basis. However, the Department of Insurance recognized the problems with such delays in the settlement of claims. In 1925, legislation was enacted requiring that a minimum premium be paid with each application or renewal.

This change was a deciding factor in the survival of the mutuals during the depression years of the early 1930s. It allowed them to create a surplus that helped them to cope with the economic chaos of those years.

When first organized, the farm mutuals had to gain their knowledge of insurance by experience. As the number of companies grew, it became apparent that they should get together to share experiences and discuss common problems and possible solutions. A meeting of the mutual companies was called in 1882. This was the initial meeting of the "Purely Mutual Underwriters Association of Ontario," now known as the Ontario Mutual Insurance Association (OMIA).

The association provided the leadership needed to keep the farm mutuals abreast of developments in insurance policy coverage's to meet the changing times. Company directors and staff had the opportunity to meet and exchange ideas with their counterparts from other companies. The OMIA was instrumental in the formation of the Fire Mutuals Guarantee Fund (FMGF) and the Farm Mutual Reinsurance Plan (FMRP), and enabled these small companies to speak with a united voice in dealings with governments.

In the 1930s, inter-company agreements were introduced enabling companies to cede to one another portions of a risk in excess of their retention. It was necessary to fill out an application for each risk stating the amount insured under each item, the term of the policy, and the name and location of the risk. Operated by the Mutual Fire Underwriters Association (MFUA), this pooling arrangement allowed a company to cede excess amounts of insurance for a pro rata share of the premium. This system was the only method available to the farm mutuals to develop capacity. The transactions involved a significant expenditure in terms of time and money, and although the arrangement was cumbersome, it worked relatively satisfactorily for many years.

In the early 1950s, the companies were faced with the post-war boom; values were rapidly increasing, and construction of new housing and other buildings was at a record level. The demand for higher limits of coverage was a problem for the farm mutuals because the maximum amount of insurance they could retain on any one risk was $3,000, $4,000 or $5,000, depending on the size of the company.

At the 1955 MFUA convention, a discussion began that eventually led to the formation of the Farm Mutual Reinsurance Plan. A committee was appointed to investigate and report on a number of alternative plans for reinsurance that had been proposed. The discussions continued through the late 1950s and culminated in 1959 with the establishment of the FMRP. In 1969, the reinsurance operation was incorporated as a mutual insurance company.  The license restricts the corporation to conducting the business of reinsurance.