What’s the difference between a Mutual Insurance Company & a Stock Insurance Company?

There is a lot to consider when it comes to choosing an insurance company – including coverage, service, and affordability. But did you know there is a difference between mutual and stock insurance companies? Mutual insurance companies have been around for more than 180 years. In fact, the first idea of mutual insurance dates as far back as the 1600s in England! But it wasn’t until 1836, when the Governor of Upper Canada, Sir Francis Bond Head, introduced legislation permitting the establishment of mutual companies in what we now know as Ontario. To learn how stock and mutual insurance companies differ, we’ve broken it down for you.?

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What is Stock Insurance??

A stock insurance company is a corporation that is owned by its investors or shareholders. Its main objective is to make a profit for them and policyholders do not directly share in the profits or losses of the company. Their driving force is their stockholders.?

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What is a Mutual Insurance company??

The primary purpose for both mutual and stock insurance companies is to provide policyholders with insurance to protect their home, vehicle, business, and farm. But because there aren’t any stockholders in mutual insurance, the interests of the policyholders are served first. The founding purpose of mutual insurance companies is to support their members, and anyone with a mutual insurance policy is a member.?

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The Mutual Model, Explained.?

In the simplest of terms, the model is broken down into three stages. First, premium dollars are collected from the policyholders. Second, the premium dollars are used to cover the costs of policyholder insurance claims and the overhead and operational costs of the mutual insurance company. And third, because there are no shareholders in mutual insurance, any surplus of premium dollars is given back to policyholders in the form of refund cheques, donations to community initiatives and local charities, or investments to preserve the company’s long-term viability.?

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The Benefits of Mutual Insurance?

Security:?

Cayuga Mutual Insurance is part of the Network of Ontario Mutuals Companies. We have a network of more than 40 insurance companies across the province, yet because of this connection, we are one of the most trusted and secure financial networks in the world.?

Local:?

Ontario Mutuals is rooted in the community. All premiums stay in that community, employing neighbours, supporting the local economy, and bolstering local projects that matter to policyholders.??

People-Centered:?

This means you will not deal with call centres and anonymous voices. Instead, you deal directly with your agent, person to person, where they actually know your name and care about your wellbeing.?We believe in a thriving community of people who believe in coming together for the greater good.?

Coverage:?

Although mutuals first started back in small towns and rural areas serving farms in the 1800s, we have grown to provide a full range of coverage for your home, automobile, commercial and farm insurance, and seasonal properties; all of which can be tailored to best protect you and your family.?

Valued Team Member:?

When you buy a mutual insurance policy, you automatically become a member of that company. This means you have a voice in important issues, like electing a board of directors at the?annual meeting.?

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Buying insurance does not have to be difficult. Sure, there’s a lot to think about, but keep in mind that you don’t have to tackle it alone. By choosing mutual insurance, you’re choosing service and community above stock and dividends. It’s not the way every insurance company does business, but it’s the Mutual Way – try it out for yourself, give Cayuga Mutual Insurance a call today.??