Risk & Business Magazine McFarlan Rowlands Magazine Winter 2018 - Page 28

MUTUAL OWNERSHIP MODEL MIKE VIRLEY FCIP, CLA, PFMM, VICE-PRESIDENT OF MEMBER SERVICES, TRILLIUM MUTUAL INSURANCE COMPANY The Higher Purpose And Benefits Of The Mutual Ownership Model I nsurance is a begrudging purchase, generally not wanted, with most buyers feeling that they will never use it, or at least hopeful that they will never need to use it. Most people at some level know, but likely give very little thought to the fact, that insurance underpins the world’s economy. The economy’s growth is primarily based upon the ability to access credit, whether obtaining a mortgage to buy a home or property, acquiring a loan, or needing credit to start or expand a farm or business. In order to access credit, the creditor generally requires that the underlying assets are protected by insurance. Absent the ability to access credit, individuals are limited by how much of their owned assets they are willing to put at risk in order to grow, expand, or accumulate more wealth. In many developing countries today, the penetration rate for insurance is very low, thereby limiting economic growth. A farmer in a developing country who cannot access or afford insurance cannot access credit, thereby limiting their investment in, and the growth of, their farming operation. They are limited by how much of their own capital they have and are willing to risk. Roughly 160 years ago in Ontario, the mutual insurance system was born out of necessity by Ontario farmers. The mutual model helped mitigate the extent to which their assets were at risk from a devastating peril while still allowing them to grow their 28 operations. Unable to acquire or afford insurance, farmers in various counties across Ontario started to band together to insure one another. They pooled their money to draw upon if one of them should suffer a loss. They recognized the mutual value of coming together for the common good. This ethos was based upon the Seven Cooperative (Mutual) Principles as established by the Rochdale Society of Equitable Pioneers: 1. Voluntary and open membership 2. Democratic member control 3. Member economic participation mutual insurers operate today. As a 100% Member-owned mutual company, neither focused upon maximizing profitability nor quarterly share values and returns, we can focus upon the long-term sustainability of the organization for our Members. We are tasked with being the fiduciary guardian of the capital surplus that has accumulated since our inception and that is owned by all the Members. We exist for the sole benefit of our Members. THAT MUTUAL OWNERSHIP MODEL GUIDES HOW WE ACT AND THE EXPERIENCE DELIVERED: 4. Autonomy and independence • Policyholders are Members/Owners and treated with professionalism, courtesy, transparency, respect, and a greater level of service. 6. Cooperation among Cooperatives (Mutuals) • We share risk management advice and education to protect Members’ families and assets. 5. Education, training, and information 7. Concern for community This rudimentary insurance system became more formal and structured over the years. The world is a different place today, but our Members still have the same needs and face similar risks: the complexity and diversity of agricultural and farming operations and equipment, the distance from fire protection, fuel oil and alternative heating methods, windmills and solar energy, and drones. The spirit of mutual reliance upon one another and mutual ownership is the underlying value system upon which farm • Claims are paid promptly, fairly, and equitably, while understanding the fiduciary duty owed to all Members. • We create and provide the best possible insurance solutions offered at an affordable cost, while understanding that the only means by which a mutual can raise capital is with profitable operations over the long term. • We give back to the communities that we serve, where our Members and employees live—we are all in this together.