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The Mutual Difference and Why it Matters

What sets PEI Mutual Insurance apart from the other insurance providers? The answer is in our name – we’re a mutual company AND we’re 100% local.

But what exactly does that mean and why does it make us the best choice for Islanders seeking peace of mind with comprehensive insurance?  

We’re here to help set the record straight on all things ‘mutual’, so you can make the best-informed decision when shopping around for home, business, fishing, or farm insurance. Keep on reading to learn about the unique ownership structure of mutual companies and how this benefits policyholders. We’ll also look at the critical role mutual insurance has played in Canada for over 175 years. We’ll tackle some of those pesky myths and misconceptions about mutual insurance.

By the end of this article, we reckon you’ll be singing the praises of all things mutual! And if you’re already a PEI Mutual policyholder, we hope this article will give you peace of mind that you made the right insurance choice! 

 

It Comes Down to Ownership and Purpose

The biggest difference between a mutual insurance company and a stock insurance company is their ownership structure. 

Stock insurance companies, like corporations, are owned by external shareholders. That means that the company’s primary goal is to maximize shareholder returns, with profits being paid out to the shareholders. 

By contrast, a mutual insurance company is fully owned by its policyholders, also known as ‘members’. Its primary goal is to serve its members and the community. Profits are reinvested to strengthen operations and/or returned directly to the members. Here at PEI Mutual, we love giving profits back to our policyholders/members via reduced pricing on their annual premiums, and in some years even sending a rebate cheque in the mail!

 

The governance structure is also very different. In a stock insurance company, the investors hold control and typically prioritize how they can quickly make the most return on their money, even if it’s to the detriment of the company’s policyholders. By comparison, at a mutual insurance company, the members vote on the board of directors who set the bylaws. All members are welcome to attend the Annual General Meetings to vote on bylaws and get an overview of the previous year’s financial performance.

Here’s a quick ‘cheat sheet’ that highlights the key differences between a mutual insurance company and a stock insurance company. 

This is the heart of the ‘Mutual Difference’ – mutual insurance companies are driven by people, not profits. 

 

Common Myths About Mutuals

Despite their long-standing success, mutual companies are sometimes misunderstood. Here are a few myths we’d like to clear up:

Myth: Mutuals don’t offer competitive rates.
Fact: Mutuals often provide very competitive pricing because they don’t have to generate profits for shareholders and operate with a community-first mindset. At PEI Mutual, we take pride in understanding the unique needs of Island customers and providing homeowners, businesses, farmers and fishers with insurance tailored to their specific needs and budget.

Myth: Mutuals can’t handle big claims or major events.
Fact: Mutual companies typically rely on their own resources for claim payouts. In the rare case of a large-scale event, they will work together through national networks such as Ontario Mutual Insurance Association (OMIA), Canadian Association of Mutual Insurance Companies (CAMIC), regional networks such as the Maritime Association of Mutual Insurance Companies (MAMIC), and Farm Mutual Reinsurance to pool resources and support each other. 

At PEI Mutual, we have been able to successfully navigate several major events, including Hurricane Fiona, because of our solid financial planning and industry partnerships. 

Myth: Mutuals are old-fashioned or behind the times.
Fact: Mutual companies have always been committed to staying on the leading edge of change to best serve their members. Today, that means investing in modern technology and online tools, staying up-to-date on the evolving needs of policyholders, and upholding high standards of customer service. Here at PEI Mutual, we are currently transitioning to a state of the art custom system which will serve us for many years to come. 

 

Mutuals Are Older Than Canada!

Mutual insurance companies have been a pillar of Canadian communities since the mid-1800s, well before Confederation.

At that time, farming communities were taking root across the country. Agriculture was shaping the economy and society of the nation that would become Canada. Despite the important role farmers played in building the country, they struggled to access insurance for their equipment, crops, and livestock. Established insurance companies were not interested in taking on the risks associated with protecting farmers from natural and man-made disasters. 

Farmers had a choice – continue farming uninsured and risk losing everything or come up with their own grassroots solution. Since they’re a smart bunch, farmers chose the latter option and began organizing mutual protection associations to pool resources and share the risks inherent in farming. 

In 1836, Upper Canada established laws that recognized farm mutual insurance companies and guided their operation. Over the next few decades, Lower Canada and Western Canada followed suit, allowing mutuals to practice. Not wanting to be left behind, Atlantic Canada joined the mutual movement in 1885 with – you guessed it – the opening of PEI Mutual! That’s right, we were the first mutual company in the region and we continue thriving today, with expanded coverage for fishers, business owners and homeowners. 

 

Community-Supported, Community-Focused

Since the day we opened our doors, we’ve been committed to serving our members and investing in the communities that have supported us for generations. That translates into:

• Supporting local organizations and charities, such as Special Olympics and Big Brothers, Big Sisters, Island Hospitals, United Way, and many more.
• Supporting local businesses in myriad ways. For example, during PEI Burger Love 2025, we gave staff members a $50 gift card to go burger-adventuring. A win for our staff, PEI restaurateurs, and Anderson House. 
• Sponsoring youth initiatives and community events, such as PEI Mutual Festival of Small Halls.
• Investing in our Island graduates through the PEI Mutual Education Trust. Founded in 1985 with a $100,000 donation given to the Trust by PEI Mutual, we’re committed to making a meaningful impact by offering $1,500 scholarships to 20 deserving Grade 12 students across the Island every year.

People Over Profit 

When you boil it down, mutual insurance companies were founded on the belief that people want to and can take care of each other.

At PEI Mutual, that principle guides us every day. When you become a PEI Mutual policyholder, you’re joining a member-owned organization committed to fairness, stability, and community well-being.

If you’d like to learn more about how mutual insurance works and whether it’s the right choice for your needs, we’d be happy to chat!