Mutual insurance

A mutual insurance company is an insurance company owned entirely by its policyholders. Any profits earned by a mutual insurance company are rebated to policyholders in the form of dividend distributions or reduced future premiums. In contrast, a stock insurance company is owned by investors who have purchased company stock; any profits generated by a stock insurance company are distributed to the investors without necessarily benefiting the policyholders.

The concept of mutual insurance originated in England in the late 17th century to cover losses due to fire.[1] The mutual/casualty insurance industry began in the United States in 1752 when Benjamin Franklin established the Philadelphia Contributionship for the Insurance of Houses From Loss by Fire.[1] Mutual property/casualty insurance companies exist now in nearly every country around the globe.[2]

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.[3] In North America the National Association of Mutual Insurance Companies (NAMIC), founded in 1895, is the sole representative of U.S. and Canadian mutual insurance companies in the areas of advocacy and education.[4]

History in the U.S.

The "mutual holding company" structure was first introduced in Iowa in 1995, and has spread since then.[5] There have been concerns that the mutual holding company conversion is disadvantageous for the owners of the company, the policyholders,[6] The major disadvantage of mutual insurance companies is the difficulty of raising capital.[7]

In the 111th Congress, Carolyn Maloney sponsored a bill that she claimed would have protected mutual holding company owners. The measure, H.R. 3291, died in committee.

Mutual holding companies are one way to undergo privatization, also called demutualization.

List of mutual insurance companies

Bermuda

Canada

Denmark

Faroe Islands

Finland

Japan

New Zealand

Philippines

Slovenia

South Africa

Spain

Sweden

United Kingdom

United States

References

  1. 1 2 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. Retrieved 24 February 2011.
  3. ↑ "ICMIF Members list". Retrieved March 5, 2010.
  4. ↑ 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. p. 21.
  5. ↑ Banstetter et al. (1997). The Mutual Holding Company: A New Structural Option. The Association of Life Insurance Counsel. pp 65-140
  6. ↑ Rambeck R. (2001). Mutual Holding Company: A Shell Game Without the Pea. Insurance Journal.
  7. ↑ What demutualization means for policyholders. Insure.com. January 28, 2003
  8. ↑ https://www.pps.co.za/pages/about/our-heritage.php
  9. ↑ http://www.iemas.co.za/index.php/who-we-are/who-we-are-2
  10. ↑ http://www.avbob.co.za/Static/Our_Origin
  11. ↑ Description of a mutual insurance company from Guardian Life
  12. ↑ from Securian

External links

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