Reinsurance
 Mutual companies began sharing risks with each other in the
1930's through inter-company agreements. Any one company could
share portions of risks in excess of its retention with
neighbouring mutual companies.
In the mid-40's, this system was augmented by what was
referred to as "The Supplemental Reinsurance Pool".
This pool was operated by the secretary of the Mutual Fire
Underwriters' Association and was a pooling arrangement that
allowed a company to cede excess amounts of insurance to the
pool for a pro-rata share of the premium.
After the Second World War, the mutuals were faced with the
post-war boom. Property values were rapidly increasing and
construction and development was at a record level in Ontario.
The demand for higher limits of coverage was a challenge for
the mutuals as the maximum amount of insurance they could
retain on any risk was limited, depending on the size of the
company.
By the mid-50's, the amount of time and money involved in
the transaction of reinsurance led the mutuals to explore a
more efficient alternative. This led to the formation of the
Farm Mutual Reinsurance Plan Inc. It commenced operations in
1959 - the first Canadian-owned reinsurance company.
Under this new agreement, the mutuals were required to cede
all of their reinsurance to the FMRP and were not permitted to
assume business from any other company. The new reinsurance
mechanism allowed the mutuals to eliminate much of the routine
paperwork involved in reinsuring individual risks of the day.
In the subsequent years, the FMRP, a mutual company itself
that is wholly owned by the pure mutuals within its
membership and guided by directors elected from those mutuals,
has developed into a highly sophisticated financial
institution. Since 1959, through the protection provided by
the FMRP, the policyholder-owned mutuals have been able to
expand their product base to virtually any line of insurance
required by mutual policyholders.
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