Insurance Mutual

Mutual Insurance

: mutual insurance

Mutual insurance is a type of insurance where those protected by the insurance (policyholders) also have certain “ownership” rights in the organization. These “ownership” rights typically consist of the ability to elect the management of the organization and to participate in a distribution of any net assets or surplus should the organization cease doing business. Historically, insurance began in the USA through a mutual (or cooperative) structure. Recently, some insurance companies have gone through demutualization and become public companies in an effort, among other things, to improve their ability to acquire capital.

The global trade association for the industry, the International Cooperative and Mutual Insurance Federation, claims 206 members in 72 countries, in turn representing 400 insurers.

It is quite common for insurance to be carried on a mutual basis. More familiar is the mutual insurance company, the members of which will be its policyholders. If a mutual insurance company generates profits then it is the policyholders who are entitled to share in those profits.

In practice this entitlement is unlikely to produce any visible benefit for the members of most mutual general insurers, as accumulated profits tend to be re-invested in the business, but this does not mean that the companies are not operating on a mutual basis. A company may be a mutual insurer whether it has 200 or 2,000,000 policyholders. Indeed some very large insurance companies carry on their business on a mutual basis – even though many of their policyholders are probably quite oblivious of the fact.

Some insurers deny policyholders a right to participate in surplus until they have been members of the company for a qualifying period.

A mutual concern is not one that trades only with its members. Unless the contributors to the fund control the company that owns it by being members with the right to vote, it is very unlikely that the company will carry on a mutual business.

As policyholders, the contributors’ rights will be governed solely by their contract (or policy) with the company, whilst any surplus will belong firstly to the company, and will normally be distributable in accordance with the company’s constitution to the members by those who are in control of the company. Normally, in the case of an insurance company that purports to be carrying on mutual business policyholders will need to become voting members of the company in order to secure their entitlement to participate in surplus.

List of mutual insurance companies

Germany

Members of “Arbeitsgemeinschaft der Versicherungsvereine auf Gegenseitigkeit e.V”

Japan

Asahi Mutual Life Insurance Company, The Dai-ichi Mutual Life Insurance Company, Fukoku Mutual Life Insurance Company, Meiji Yasuda Life Insurance Company, Nippon Life Insurance Company, Sumitomo Life Insurance Company

Spain

Mutua Madrileña

United Kingdom

The Equitable Life Assurance Society, NFU Mutual, Royal London Mutual Insurance, engage Mutual Assurance, Liverpool Victoria

United States

Acacia Life Insurance Company, American Family Insurance, Amica, Ameritas Life Insurance Company, Auto-Owners Insurance, Boston Mutual, CAMICO Mutual Insurance Company, Church Mutual Insurance Company, COUNTRY Insurance & Financial Services, CUNA Mutual Group

FM Global, Guardian Life, Hastings Mutual Insurance Company, HCSC – Blue Cross Plans of IL, NM, OK and TX, Illinois Mutual, Liberty Mutual, Massachusetts Mutual Life Insurance Company, MiddleOak, Missouri Employers Mutual, MTL Insurance Company, Mutual of America, Mutual of Omaha, Nationwide Mutual Insurance Company, New York Life, North Carolina Mutual, Northwestern Mutual Life, PEMCO, Penn Mutual Life, Physicians Mutual, SBLI USA Mutual Life, Security Mutual of NY, Sentry Insurance, Shelter Insurance, State Farm Insurance, UNIFI Companies, Union Central Life Insurance Company, Western & Southern