In the Maritimes, there is an old saying: “If you don’t like the weather, just wait five minutes.” The same saying could be used to describe the insurance industry within which Nova Scotia-based Clare Mutual operates. However, in five minutes, there is no guarantee of condition improvements—government regulation, competition, and demutualization are just a few examples of the constantly changing environmental factors that are getting more difficult to keep up with. Even Nova Scotia’s weather—the increasing frequency and severity of rain and windstorms—is becoming a significant underwriting challenge.
Founded in 1936, Clare Mutual originally offered only fire and lighting insurance. In the 1980s, facing competition from other providers, it expanded to offer homeowners’ insurance as well. Today, it has 4,500 policies and writes more $2.7 million in premiums annually, thanks in part to recognizing the importance of a local focus. “We know our clients’ insurance needs, and we insure properties when others will not, such as locally constructed wood and sawdust burning installations,” says Janice Belliveau, who serves as president.
In order to survive as a small insurance company, Clare Mutual abides by one basic principle that is important going forward: it’s had to change the way it thinks, if it is going to be able to implement the changes that have to come about to guarantee future success.
“Change doesn’t come about like magic,” Belliveau says. “It takes time and a proactive approach, and this starts at the most important place: within ourselves.”
One of Clare Mutual’s strong suits is networking with partners it trusts. “As a small company of four staff members and three agents, we can’t do it all, nor do we have all the knowledge and resources needed to run an insurance company; we have to network with partners we trust,” Belliveau says. “For example, our reinsurer, Farm Mutual Reinsurance Plan, in addition to providing reinsurance expertise, provides much guidance and assistance regarding regulatory changes. Grant Thornton LLP and the Ontario Mutual Insurance Association have been key in the implementation of International Financial Reporting Standards.”
In addition, the company views change as an opportunity. “Change is a constant in today’s insurance industry,” Belliveau explains. “It’s an opportunity to review existing operations and implement the necessary changes to keep up with the never-ending industry changes and better meet the needs of our clients.”
For example, Clare Mutual will see two of its three commission-based agents retire within the next few years. Instead of simply replacing them, Belliveau used the change as an opportunity to consider if the business model was working. She decided it could be improved, and made plans to implement a new distribution system. As commission-based agents retire, they’ll be replaced by salaried customer-service representatives who will communicate with the clients primarily over the phone, and client visits will be done by loss prevention staff. Having two people manage a portfolio instead of one will allow Clare Mutual to better manage risk with a more controlled cost. A large part of the success of this implementation is a result of networking with Erie Mutual, based in Ontario,” Belliveau says. “Their experience and guidance with this project has been invaluable.
The Canadian Mutual system is made up of a large number of individual mutual-insurance companies, many of them smaller companies like Clare Mutual. “Looking to the future, it’s difficult not to see, to one extent, a network of shared resources and, to the other extent, a network of possible mergers,” says Belliveau. “Can we survive without these changes? Can we—as an industry and as individual companies—be strong enough to see the strengths of our neighbouring mutuals and be willing to work with them?”
Belliveau is insistent, however, that the future success of Clare Mutual and the mutual industry will be by making industry slogans a reality. With slogans like “Together we can, together we will” and “Mutuality and working together,” there is a whole other level of success that can be achieved by the mutual industry that cannot be attained with the current model. “Can we look at our mutual colleagues and see the strengths in resources and knowledge that we can pull together, as a group, to reach the next level of success?” Belliveau asks. “Here lies the true challenge.”