The following is a re-print of a past column by former Advertiser columnist Stephen Thorning, who passed away on Feb. 23, 2015.
Some text has been updated to reflect changes since the original publication and any images used may not be the same as those that accompanied the original publication.
A feature of the 19th century rural economy was the local mutual fire insurance company.
Most of those were organized to serve farmers in a single township. The earliest in Wellington County and the neighbouring areas dated to the 1850s.
The local mutual companies attempted to keep their administration costs, and their premiums, as low as possible. As mutual companies, they were owned by their policy holders. There was no full-time staff, and premiums could vary a great deal from year to year, depending on the losses and payouts made during the previous year.
In the long run, the most successful of the local mutual companies has been the Peel Maryborough Mutual Insurance Company (Edge Mutual since 2015), based in Drayton. Formed in 1887, this firm enjoyed significant growth over the years. It now has a full-time professional staff, policy holders across the province, and annual income from premiums exceeding $12-million per year (as of 2009).
The Peel Maryborough Company, though, is a rarity, a survivor of what was once a significant sector of the insurance business. One by one, the other local companies fell by the wayside. A few were wound up, but most were taken over by larger firms. Their strengths – local service and low premiums – were also their weaknesses when a rash of claims sapped their financial resources.
One of the casualties in the local insurance business was the Nichol Mutual Fire Insurance Company. Few readers will remember it, because it ceased to exist in 1931.
The Nichol Mutual was one of the earlier insurance companies in this area, dating to 1860. The organizers were some of the important farmers and businessmen in Nichol and the western part of Garafraxa Townships. Alexander Watt, who operated a huge farm on the northern edge of Salem, was the first president. Directors included David Allan, the Salem storekeeper, Sem Wissler, the founder of Salem, and well-known farmers such as A.F. Sherratt, John Brockie and William Robinson.
John Beattie served as secretary-treasurer for many years. Initially a farmer, he moved to Fergus in 1871, and four years later was appointed clerk of Wellington County. Over the years, the group of directors was a stable one. Several served for decades, and all, of course, were policy holders.
Growth of the company was slow and cautious. At its 1885 meeting, after 25 years in business, there were 1,611 policies in force, insuring property valued at $2,100,000. Premiums were low that year. During 1884 there had been 11 claims, but the total loss amounted to only $3,100.
Major claims on the company were infrequent. The minutes of the annual meetings of the company make for very boring reading. The company provided solid insurance coverage to policy holders, mainly farmers in Nichol and West Garafraxa, at rates that were as low as possible.
Fortunes for the company began to turn in 1928. A series of mysterious barn fires began that year. There were a number of them across the county, but they seemed to be concentrated in Nichol and especially so in West Garafraxa. The rash of fires ended after a few years, but there were no arrests or solid leads that might allow police to identify the perpetrators.
For three years the Nichol Mutual paid out record claims. The payments quickly depleted the cash reserves of the company.
As a consequence, annual premiums rose in 1929 and 1930. As well, there were two extra assessments on policy holders to meet the claims payouts.
Soon the Nichol Mutual’s rates were higher than other insurance options. That led to the cancellation of dozens of policies, as farmers sought the best deals they could find. Consequently, the directors met several times in late 1930 to discuss their options.
W.L. Deans was president that year. He called several meetings of the directors during the fall of 1930. Based on the current trends, only two options seemed viable for the company. Neither was attractive to the directors nor to the majority of policy holders, but there were no other courses that would put the company on a solid footing. They could either wind down the business and dissolve the company, or merge their business with that of a larger and more stable company. The latter course seemed to be the best, causing the least disruption and inconvenience to the policy holders.
Discussions with several larger insurance companies followed. The directors concluded that it would be unwise to merge with any of the other remaining local mutual companies, most of which were also weak and vulnerable to the same situation that had put the Nichol Mutual in its unsustainable situation.
The directors concluded that the Wawanesa Mutual Insurance Company was their best prospect.
They liked the idea that it was a mutual company, run for the benefit of its policy holders rather than outside stockholders. It was also a very strong company, at the time the largest fire insurance company in Canada. There were other factors that spoke well for the company. It had a wide range of insurance policies, not just agricultural, over a wide geographic area.
That spread the risk should there be large claims in a specific area, such as those that had led to the Nichol Mutual’s troubles.
As well, the company had large cash reserves, and a re-insurance agreement through Lloyd’s of London that provided a cushion in the event of a catastrophic cluster of claims.
W.L. Deans and secretary James Beattie – son of the original secretary – presented the proposed takeover at the 1931 annual meeting of the company, held at the Fergus library on Feb. 21, 1931. It was a Saturday, and attendance was large. After dealing with the reports for the previous year, Deans explained the agreement and the reasons for it.
The document had been ironed out by the directors, Wawanesa officials and the provincial Superintendent of Insurance, who was also present.
James Beattie then read the agreement. It authorized the Wawanesa Company to re-insure all current policies of the Nichol Mutual company effective Jan. 1, 1932, and instructed the directors to take all measures necessary to turn the business over to Wawanesa.
The policy holders approved the agreement with little discussion or debate. Approval of a bylaw authorizing the agreement followed. That was the last official act by the board.
Howell Smith of the Wawanesa Company then rose and read a lengthy address, outlining the nature of the business of his firm and its strengths. He reinforced the good service and reasonable rates offered by a mutual company, run in the interests of the policy holders. His words helped to soothe the feelings of the policy holders, virtually all of whom would have preferred to remain independent. When Smith sat down, Deans accepted the final motion, to adjourn for the last time.
The end had come quickly, with the same quiet efficiency that had characterized the company during its 70 years of existence. Many of those present were sons and grandsons of the founders and first policy holders of the company.
In his editorial marking the end of the Nichol Mutual, Fergus editor Hugh Templin observed that, “It seems too bad that a local company such as the Nichol had to give up after years of success.”
Though gone for close to a century, old Nichol Mutual policies are still prized keepsakes in a number of local households.
*This column was originally published in the Wellington Advertiser on Sept. 18, 2009.
