Mutual insurance

Mutual insurance

A mutual insurance company is an insurance company which has no shareholders but instead is owned entirely by its policyholders. The primary form of financial business set up as a mutual company in the United States has been mutual insurance. Under this idea, what would have been profits are instead rebated to the clients in the form of dividend distributions or reduced future premiums. A mutual, mutual organization, or mutual society is an organization (which is often, but not always, a company or business) based on the principle of mutuality. Unlike a true cooperative, members usually do not contribute to the capital of the company by direct investment, but derive their right to profits and votes through their customer relationship.[dubious – discuss] A mutual organization or society is often simply referred to as a mutual. This could be seen as a competitive advantage to such companies — the idea of owning a piece of the company could be more attractive to some potential clients than the idea of being a source of profits for investors. This ownership either extends to all its policyholders or is restricted to certain classes of policyholders. Ownership rights typically include voting rights, for instance in the election of the board of directors. In a mutual insurance company, any distributed surplus funds are paid entirely to policyholders, whereas in a proprietary or stock company (one with shareholders) a proportion of the surplus is paid to shareholders while the balance is held in reserve by the insurer.

The American mutual property/casualty insurance industry was founded in 1752 by Benjamin Franklin when he established the Philadelphia Contributionship for the Insurance of Houses From Loss by Fire,[1] although the mutual concept actually originated in England almost 60 years before when the first mutual fire insurer was conceived.[1] In nearly every country around the globe, there are mutual property/casualty insurance companies.[2] The Association of European Cooperative and Mutual Insurers has argued that European mutual insurance companies promote active policyholder influence, are innovators of new products and services, and actively demonstrate social commitment.[3]

After the global economic crisis in 2008, the mutual property/casualty insurance industry was one segment within the financial services sector that neither needed nor wanted a financial bailout.[4][5] However, primarily because of news coverage of the role American International Group (AIG) played in the crisis, there were and still are some misconceptions about the role played by property/casualty insurance industry. News reports repeatedly and erroneously described the multinational corporation as an “insurance giant,” when in fact AIG was a holding company consisting of a diverse group of businesses – of which about 70 insurance companies were included.[6]

The National Association of Mutual Insurance Companies (NAMIC) is the only U.S. trade association representing mutual property/casualty insurance companies. Since 1895, NAMIC has been serving its U.S. and Canadian members in areas of advocacy and education.[7]

The global trade association for the industry, the International Cooperative and Mutual Insurance Federation, claims 216 members in 74 countries, in turn representing over 400 insurers.[8]

Contents

List of mutual insurance companies

Bermuda

Canada

Japan

New Zealand

  • Farmers Mutual Group

Spain

United Kingdom[9]

United States

List of demutualized (NOT-Mutual or No Longer Mutual) insurance companies

Australia

  • National Mutual Life Association (now known as AXA Australia)
  • AMP (formally known as 'Australian Mutual Provident Society')
  • Colonial Mutual (now part of Commonwealth Bank of Australia)

Japan

South Africa

United Kingdom

United States

  • John Hancock Mutual Life (Previously Mutual)
  • MetLife (Previously Mutual)
  • MONY (was Mutual of New York)
  • Principal Financial Group (Not Mutual)
  • Prudential Insurance (Previously Mutual)

List of defunct mutual insurance companies

Japan

  • Chiyoda Mutual Life Insurance Company
  • Daihyaku Life Insurance Company
  • Daiichi Mutual Fire & Marine Insurance Company
  • Nissan Mutual Life Insurance Company
  • Toho Mutual Life Insurance company
  • Tokyo Mutual Life Insurance Company

References

  1. ^ a b Wright, Janet; Virginia Wadsley, Janice Artandi (1994). The History of the National Association of Mutual Insurance Companies, A Century of Commitment, 1895–1995. Indianapolis, IN: National Association of Mutual Insurance Companies. pp. 1–5. 
  2. ^ "Association of Mutual Insurers and Insurance Cooperatives in Europe". AMICE. http://www.amice-eu.org/worldwide.aspx. Retrieved 24 February 2011. 
  3. ^ "Valuing Our Mutuality II, An ACME Study". ACME. October 2003. 
  4. ^ Frye, Andrew; Erik Holm (27). "U.S. Property Insurers Won't Seek Government Capital (Update1)". www.bloomberg.com. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aVvil5LKd0gw&refer=home. Retrieved 24 February 2011. 
  5. ^ Satter, Marlene (December). "Covered by a Tarp?". AdvisorOne. http://www.advisorone.com/article/covered-tarp. Retrieved 24 February 2011. 
  6. ^ Harrington, Ph.D., Scott E. (September 2009). "The Financial Crisis, Systemic Risk, and the Future of Insurance Regulation". NAMIC. http://www.namic.org/pdf/090908SystemicRiskAndTheFuture.pdf. Retrieved 24 February 2011. 
  7. ^ Wright, Janet; Virginia Wadsley, Janice Artandi (1994). The History of the National Association of Mutual Insurance Companies, A Century of Commitment, 1895–1995. Indianapolis, IN: National Association of Mutual Insurance Companies. pp. 21. 
  8. ^ ICMIF: Members list. Retrieved on March 5, 2010.
  9. ^ AFM members. Association of Financial Mutuals. Retrieved on March 5, 2010. A longer list of UK mutual insurers.
  10. ^ Guardian Life's description of being a mutual insurance company

External links


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Look at other dictionaries:

  • Mutual insurance — Mutual Mu tu*al, a. [F. mutuel, L. mutuus, orig., exchanged, borrowed, lent; akin to mutare to change. See {Mutable}.] 1. Reciprocally acting or related; reciprocally receiving and giving; reciprocally given and received; reciprocal;… …   The Collaborative International Dictionary of English

  • mutual insurance — Insurance under the policies of a mutual insurance company, that is, one operating on a mutual basis rather than for the purpose of profits benefiting stockholders. See mutual insurance company; reciprocal insurance …   Ballentine's law dictionary

  • Mutual insurance company — Mutual Mu tu*al, a. [F. mutuel, L. mutuus, orig., exchanged, borrowed, lent; akin to mutare to change. See {Mutable}.] 1. Reciprocally acting or related; reciprocally receiving and giving; reciprocally given and received; reciprocal;… …   The Collaborative International Dictionary of English

  • mutual insurance company — ➔ company * * * mutual insurance company UK US noun [C] (also mutual insurer) FINANCE, INSURANCE ► an insurance company owned by its members who make regular payments into a fund that will pay their costs if they have a loss, accident, etc. :… …   Financial and business terms

  • mutual insurance company — n. An insurance company owned by the people it insures, who share in the company’s profits. The Essential Law Dictionary. Sphinx Publishing, An imprint of Sourcebooks, Inc. Amy Hackney Blackwell. 2008 …   Law dictionary

  • mutual insurance — insurance in which those insured become members of a company who reciprocally engage, by payment of certain amounts into a common fund, to indemnify one another against loss. * * * …   Universalium

  • mutual insurance — insurance in which those insured become members of a company who reciprocally engage, by payment of certain amounts into a common fund, to indemnify one another against loss …   Useful english dictionary

  • mutual insurance — /mjutʃuəl ɪnˈʃɔrəns/ (say myoohchoohuhl in shawruhns) noun insurance in which those insured become members of a company who reciprocally engage, by payment of certain amounts into a common fund, to indemnify one another against loss …  

  • mutual insurance company — A cooperative enterprise wherein the members constitute both insurer and insured, where the members all contribute, by a system of premiums or assessments, to the creation of a fund from which all losses and liabilities are paid, and wherein the… …   Ballentine's law dictionary

  • mutual insurance company — /ˌmju:tʃuəl ɪn ʃυərəns ˌkʌmp(ə)ni/ noun a company which belongs to insurance policy holders. Also called mutual company …   Dictionary of banking and finance

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