The principles of mutual insurance remain basically unchanged since farm mutuals were first established in Ontario.
Mutual Insurers are community based and owned by their Policyholders, there are no stockholders. A Board of Directors is elected from among the Policyholders at the Annual General Meeting. This Board is responsible for governance and the appointment of the General Manager. The General Manager is responsbile for operations.
In return for agreeing to secure Policyholders against loss, the Company collects premiums. This fund, together with income from investments, is used to pay losses sustained by the Policyholders as well as the expenses of running the Company. Any surplus either remains in the Company's surplus account or may be refunded to Policyholders at the discretion of the Board of Directors.
The concept is of mutual trust.