A mutual insurance company is an insurance company owned entirely by its policyholders. It is a form of consumers' co-operative. Any profits earned by a mutual insurance company are either retained within the company or 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.
History
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]
Recent developments in the United States
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,, died in committee.
Mutual holding companies are one way to undergo privatization, also called demutualization.
List of mutual insurance companies
Multinational
Bermuda
Canada
• Algoma Mutual Insurance Company
• Amherst Island Mutual Insurance Company
• Antigonish Farmers' Mutual Insurance Company
• Ayr Farmers Mutual Insurance Company
• Bay of Quinte Mutual Insurance Company
See also
- Reciprocal inter-insurance exchange – a type of insurance company which, similar to a mutual, is not owned by stockholders.
- Protection and indemnity insurance
Further reading
- Emery, Herbert, and George Emery. A Young Man’s Benefit: The Independent Order of Odd Fellows And Sickness Insurance in the United States and Canada, 1860–1929 (McGill-Queen's University Press, 1999).
- Van Leeuwen, Marco H.D. Mutual Insurance, 1550–2015: From Guild Welfare and Friendly Societies to Contemporary Micro-Insurers (Palgrave Macmillan, 2016) 321 pp. online review, A standard scholarly history
External links
- NAMIC – National Association of Mutual Insurance Companies
- ICMIF – International Cooperative and Mutual Insurance Federation
- AFM – Association of Financial Mutuals (UK)
- University of Wisconsin Center for Cooperatives: Research on the Economic Impact of Cooperatives. Economic Impacts of Cooperatives › Financial Services > Mutual Insurance
References
- Janet Wright. The History of the National Association of Mutual Insurance Companies, A Century of Commitment, 1895–1995 National Association of Mutual Insurance Companies, 1994^
- Association of Mutual Insurers and Insurance Cooperatives in Europe AMICE, retrieved 24 February 2011^
- ICMIF Members list retrieved March 5, 2010^