Every year that you renew your insurance policy or when you quote out your insurance, you have an option that you may not have realized that you had. You can place your insurance with a Mutual Insurance company or a Stock Insurance company. The majority of Ontario citizens might not know the difference between the two types of insurance companies, and you might even have your insurance with a mutual insurance company now and not realize it.
In this article we will explain what makes a mutual insurance company different than a stock insurance company and we will outline if there any benefits for you as a policy holder to place your insurance with a mutual insurance company. When it comes to insurance, it is always better to be fully informed on your options.
The Mutual Insurance Difference
A mutual insurance company operates very similar to any other insurance company. The difference mainly comes down to their company structures and goals. Mutual insurance companies are owned by their policy holders. Their policy holders will be allowed to vote on important decisions regarding the insurance company. Mutual insurance companies’ directors are also policy holders that are elected by other policy holders.
Ontario Mutuals is a brand for 38 independent, 100% Canadian owned mutual insurance companies that together have one of the strongest, most secure financial networks in the world. The Ontario Mutuals date back to the mid-1800s and show no sign of slowing down now. You can learn more about the Ontario Mutuals history on their website. With this type of structure, the mutual insurance companies will set profit margins very low as they are not in the business to make their shareholders the most amount of money possible. Mutual insurance companies will often set their profit caps as low as 2.5% annually to ensure they are supporting their policy holders as best that they can and to operate on a not for profit basis. The excess money above their set profit margin is poured back into their local communities & charities.
Stock Insurance Companies
It wouldn’t be fair to write an article about mutual insurance companies and not include what makes up a stock insurance company. A stock insurance company operates just like any other normal corporate company. Their policy holders do not get a vote (unless they are an investor too), and they have no say in how the company is ran. There are some advantages to a stock company such as financial stability as they don’t rely just on their policy holders for income and they may have a larger capability to take on riskier forms of insurance.
Stock insurance companies do try to maximize their profits in order to maximize their shareholders dividends. That being said, insurance is a competitive market place and the majority of the insurance companies will try to keep their rates as low as possible to win that competition.
Which Should I Choose?
Honestly, when it comes it insurance, you have to choose the best option for yourself and your family. This could mean you find the cheapest rate out there with only the coverages you feel you need. It could also mean that you spend a little more to ensure that you are covered for anything life can throw at you. Your financial situation, your family’s needs, and your exposures to possible losses should dictate your choice.
Having an experienced broker guide you through these choices is priceless. They will use their years of experience with not just 1 insurance company, but with multiple insurance companies and multiple different coverage scenarios to find the right company for you. If your broker isn’t providing you with all of the quotes that they received or with a mutual insurance company quote, please don’t hesitate to contact us so that we can help you with your insurance needs.