Mutual insurance
Encyclopedia
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. 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, although the mutual concept actually originated in England almost 60 years before when the first mutual fire insurer was conceived. In nearly every country around the globe, there are mutual property/casualty insurance companies. 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.
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. 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.
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.
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.
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
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
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
has been 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...
. Under this idea, what would have been profits
Profit (accounting)
In accounting, profit can be considered to be the difference between the purchase price and the costs of bringing to market whatever it is that is accounted as an enterprise in terms of the component costs of delivered goods and/or services and any operating or other expenses.-Definition:There are...
are instead rebated to the clients in the form of dividend
Dividend
Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business , or it can be distributed to...
distributions or reduced future premiums. A mutual, mutual organization, or mutual society is an organization
Organization
An organization is a social group which distributes tasks for a collective goal. The word itself is derived from the Greek word organon, itself derived from the better-known word ergon - as we know `organ` - and it means a compartment for a particular job.There are a variety of legal types of...
(which is often, but not always, a company or business
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...
) based on the principle of mutuality. Unlike a true cooperative
Cooperative
A cooperative is a business organization owned and operated by a group of individuals for their mutual benefit...
, members usually do not contribute to the capital
Capital (economics)
In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. The capital goods are not significantly consumed, though they may depreciate in the production process...
of the company by direct investment, but derive their right to profits and votes through their customer
Customer
A customer is usually used to refer to a current or potential buyer or user of the products of an individual or organization, called the supplier, seller, or vendor. This is typically through purchasing or renting goods or services...
relationship. 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
Benjamin Franklin
Dr. Benjamin Franklin was one of the Founding Fathers of the United States. A noted polymath, Franklin was a leading author, printer, political theorist, politician, postmaster, scientist, musician, inventor, satirist, civic activist, statesman, and diplomat...
when he established the Philadelphia Contributionship for the Insurance of Houses From Loss by Fire, although the mutual concept actually originated in England almost 60 years before when the first mutual fire insurer was conceived. In nearly every country around the globe, there are mutual property/casualty insurance companies. 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.
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. 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.
The National Association of Mutual Insurance Companies (NAMIC)
National Association of Mutual Insurance Companies
The National Association of Mutual Insurance Companies is the only U.S. trade association representing mutual property/casualty insurance companies. Since 1895, NAMIC has been serving its U.S...
is the only U.S. trade association representing mutual property/casualty insurance companies. Since 1895, NAMIC
National Association of Mutual Insurance Companies
The National Association of Mutual Insurance Companies is the only U.S. trade association representing mutual property/casualty insurance companies. Since 1895, NAMIC has been serving its U.S...
has been serving its U.S. and Canadian members in areas of advocacy and education.
The global trade association
Trade association
A trade association, also known as an industry trade group, business association or sector association, is an organization founded and funded by businesses that operate in a specific industry...
for the industry, the International Cooperative and Mutual Insurance Federation, claims 216 members in 74 countries, in turn representing over 400 insurers.
Canada
- Townsend Farmers' Mutual Fire Insurance CompanyTownsend Farmers' Mutual Fire Insurance CompanyTownsend Farmers' Mutual Fire Insurance Company is a Canadian insurance company, headquartered in rural Ontario. The company was founded in 1879.-External links:*...
- The Wawanesa Mutual Insurance Co.The Wawanesa Mutual Insurance Co.The Wawanesa Mutual Insurance Co. is a Canadian insurance firm. Currently, the company's executive offices are located in Winnipeg, Manitoba with several branch and service offices located throughout Canada.-History:...
- Stanley Mutual Insurance Co.
- Economical Mutual Insurance Company
- Equitable Life of Canada
Japan
- Asahi Mutual Life Insurance CoAsahi Mutual Life Insurance Cois a Japanese insurance company, headquartered in Tokyo. The company was founded in 1888 and is, today, one of the largest insurers in Japan....
mpany - Fukoku Mutual Life Insurance Company
- Meiji Yasuda Life Insurance CompanyMeiji Yasuda Life Insurance Companyis a Japanese life insurance company, headquartered in Tokyo and created in 2004 from the merger of Meiji Life and Yasuda Life. The company is one of the oldest and largest insurers in Japan.-History:...
- Nippon Life Insurance CompanyNippon Life Insurance Company, also known as or is the second largest Japanese life insurance company behind Japan Post Insurance Co., Ltd. The company was founded in 1889 as the Nippon Life Assurance Co., Inc. In structure it is a mutual company...
- Sumitomo Life Insurance CompanySumitomo Life Insurance Companyis a mutual life insurance company in Japan, founded in 1907 and headquartered in Osaka.In 2005, the company announced a joint venture with the People's Insurance Company of China PICC Holdings Company . The new company will be called PICC Life Insurance Co....
United Kingdom
- The Equitable Life Assurance Society
- NFU MutualNFU MutualThe National Farmers Union Mutual Insurance Society Limited, trading as NFU Mutual, is a UK registered mutual insurance composite. It underwrites more than £1 billion in annual premium in life and general insurance lines for rural communities within the UK. NFU Mutual is based in...
- Royal London Mutual Insurance
- Engage Mutual AssuranceEngage Mutual Assurance- Engage Mutual Assurance :Engage Mutual Assurance formed in 1980 as Homeowners Friendly Society and, after a rebrand in 2005, is now known under its new trading name....
- Liverpool Victoria
United States
- Acacia Life Insurance Company
- American Family InsuranceAmerican Family InsuranceAmerican Family Insurance is a private mutual company that focuses on property, casualty and auto insurance, but also offers commercial insurance, life, health, and homeowners coverage, as well as investment and retirement-planning products...
- Ameritas Life Insurance Company
- Amica Mutual Insurance Company
- Auto-Owners InsuranceAuto-Owners InsuranceAuto-Owners Insurance is a Fortune 500 Company, and has been every year since 2002. The company was founded in 1916 by Vernon Moulton in Mount Pleasant, Michigan. Today, it is headquartered in Delta Township, Michigan and has over 65 full service and claims branches nationwide...
- CAMICO Mutual Insurance Company
- COUNTRY FinancialCOUNTRY FinancialCountry Financial is a group of US insurance and financial services companies. Its corporate headquarters are in Bloomington, Illinois.-History:...
- COUNTRY Insurance & Financial Services
- CUNA Mutual GroupCUNA Mutual GroupCUNA Mutual Group is a mutual insurance company that provides financial services to cooperatives, credit unions, their members, and other customers worldwide. CUNA Mutual Group sells commercial and consumer insurance and protection products....
- Farm Bureau
- FM GlobalFM GlobalFM Global is a U.S.-based insurance company, with offices worldwide, that specializes in loss prevention services primarily to large corporations throughout the world in the Highly Protected Risk property insurance market sector. "FM Global" is the communicative name of the company, whereas the...
- Guardian Life
- Hastings Mutual Insurance Company
- Health Care Service CorporationHealth Care Service CorporationHealth Care Service Corporation , with 13 million members in its Blue Cross and Blue Shield Plans in Illinois, New Mexico, Oklahoma and Texas, is the nation’s largest non-investor-owned health insurer and fourth largest overall....
(Blue Cross Blue Shield of Illinois, New Mexico, Oklahoma and Texas) - Illinois Mutual
- Massachusetts Mutual Life Insurance CompanyMassachusetts Mutual Life Insurance CompanyFounded in 1851, Massachusetts Mutual Life Insurance Company is a leading mutual life insurance company with 1800 offices and 13 million clients worldwide. Mass Mutual is one of the largest Life Insurance companies globally and is currently ranked 93rd in the Fortune 500 list...
- Missouri Employers MutualMissouri Employers MutualMissouri Employers Mutual Insurance is the number one workers' compensation provider in Missouri. MEM provides coverage in nearly all 600 National Council on Compensation Insurance classes. Headquartered in Columbia, Missouri, MEM has offices in Kansas City, Missouri, Springfield, Missouri, and...
- MTL Insurance Company
- Mutual of AmericaMutual of AmericaMutual of America Life Insurance Company, also referred to as Mutual of America, is a Fortune 1000 mutual company based in New York, New York. Founded in 1945, it is ranked on the Forbes 500 list as the tenth-largest insurance company in the United States.Mutual of America specializes in providing...
- Nationwide Mutual Insurance CompanyNationwide Mutual Insurance CompanyNationwide Mutual Insurance Company & Affiliated Companies is a group of large U.S. insurance and financial services companies based in Columbus...
- New York Life
- North Carolina Mutual
- Northwestern Mutual Life
- Ohio National Life Insurance CompanyOhio National Life Insurance CompanyThe Ohio National Life Insurance Company, is headquartered in Cincinnati, Ohio. It was originally founded as a stock company in 1909 but converted to mutual company status in 1959....
- Pacific Life Insurance Company
- PEMCOPEMCOPEMCO Insurance is an American personal-lines mutual insurance company based in Seattle, Washington. Its name is an acronym for Public Employees Mutual Insurance Company.-History:In 1936, Seattle schoolteacher Robert J...
- Penn MutualPenn MutualThe Penn Mutual Life Insurance Company, also commonly referred to as Penn Mutual, was founded in Philadelphia, Pennsylvania in 1847. It was the seventh mutual life insurance company chartered in the United States. It is headquartered in Horsham, Pennsylvania just outside of Philadelphia.-External...
- Physicians Mutual
- Security Mutual of NY
- Sentry InsuranceSentry InsuranceSentry Insurance, founded in 1904, is a mutual insurance company located in Stevens Point, Wisconsin. It was founded by members of the Wisconsin Retail Hardware Association, now the Midwest Hardware Association, to provide insurance for its members and was originally called Hardware Mutual. Today...
- Shelter InsuranceShelter InsuranceShelter Insurance Company is a mutual insurance company which focuses on Auto, Life, Home, Business, and Farm coverage. It operates in fourteen U.S. states and the headquarters is in Columbia, Missouri....
- State Farm InsuranceState Farm InsuranceState Farm Insurance is a group of insurance and financial services companies in the United States. The company also has operations in Canada....
- State Mutual Insurance CompanyState Mutual Insurance CompanyState Mutual Insurance Company is a mutual insurance company located in Rome, Georgia, and currently specializing in the sale of Medicare Supplement Insurance.- History :...
- UNIFI CompaniesUNIFI CompaniesAs a mutual holding company, UNIFI Mutual Holding Company, commonly referred to as UNIFI Companies is the parent company, which owns Ameritas Holding Company. Ameritas Holding Company, in turn, owns Ameritas Life Insurance Company, First Ameritas Life Insurance Corp...
- Union Central Life Insurance CompanyUnion Central Life Insurance CompanyUnion Central Life Insurance Company was founded in Cincinnati, Ohio in 1867. It was established as a mutual insurance company.Among its founders were Norman Wait Harris, founder of Harris Bank....
- USAAUSAAUnited Services Automobile Association is a Fortune 500 financial services company offering banking, investing, and insurance to people and families that serve, or served, in the United States military. In 2011, there were 8.4 million members. The company reported a net worth of $19.3 billion in...
- Western Mutual Insurance GroupWestern Mutual Insurance GroupWestern Mutual Insurance Group is a group of Property and Casualty Insurance companies, made up of Western Mutual Insurance Company, its affiliate, Residence Mutual Insurance Company, and their jointly owned subsidiary, Arizona Home Insurance Company...
- Western & Southern
- Old Missouri Mutual Insurance Company
Australia
- National Mutual Life Association (now known as AXAAXAAXA S.A. is a French global insurance group headquartered in the 8th arrondissement of Paris. AXA is a conglomerate of independently run businesses, operated according to the laws and regulations of many different countries. The AXA group of companies engage in life, health and other forms of...
Australia) - AMPAMP LimitedAMP Limited is an Australian financial corporation. It operates primarily in Australia and New Zealand. AMP formed in 1849 as the Australian Mutual Provident Society, a non-profit life insurance company. In 1998 it was demutualised and listed on the Australian and New Zealand stock exchanges...
(formally known as 'Australian Mutual Provident Society') - Colonial Mutual (now part of Commonwealth Bank of AustraliaCommonwealth Bank of AustraliaThe Commonwealth Bank of Australia is a multinational bank with businesses across New Zealand, Fiji, Asia, USA and the United Kingdom. Commonwealth Bank provides a variety of financial services including retail, business and institutional banking, funds management, superannuation, insurance,...
)
Japan
- Dai-ichi Life
- Daido Life Insurance Company
- The Kyoei Fire & Marine Insurance Co., Ltd.
- Mitsui Life Insurance Co., Ltd.
- Taiyo Life Insurance Company
- Yamato Life Insurance CompanyYamato Life Insurance CompanyThe was a life-insurance company in Japan. Yamato's headquarters were in Uchisaiwaichō, Chiyoda, Tokyo. It was founded on September 20, 1889, and was capitalized at ¥12,086,963,000. It has policies valued at ¥34,500,000,000....
United Kingdom
- Friends ProvidentFriends ProvidentFriends Provident was an organisation offering life insurance based in the United Kingdom. It was founded as a mutual Friendly Society for Quakers, although it was demutualised in 2001 and became a publicly listed company, no longer linked with the Religious Society of Friends...
- PrudentialPrudential plcPrudential plc is a multinational financial services company headquartered in London, United Kingdom.Prudential's largest division is Prudential Corporation Asia, which has over 15 million customers across 13 Asian markets and is a top-three provider of life insurance in mainland China, Hong...
- Scottish Amicable (see Prudential plcPrudential plcPrudential plc is a multinational financial services company headquartered in London, United Kingdom.Prudential's largest division is Prudential Corporation Asia, which has over 15 million customers across 13 Asian markets and is a top-three provider of life insurance in mainland China, Hong...
) - Scottish WidowsScottish WidowsScottish Widows plc is a life, pensions and investment company located in Edinburgh, Scotland, and is a subsidiary of Lloyds Banking Group. Its product range includes life assurance, pensions, investments and savings...
- Standard LifeStandard LifeStandard Life plc is a long term savings and investment business, with headquarters in Edinburgh and operations across the globe. It has 1.5 million shareholders in more than 50 countries and over 6 million customers.-History:...
United States
- John Hancock Mutual Life (Previously Mutual)
- MetLife (Previously Mutual)
- MONY (was Mutual of New York)
- Principal Financial GroupPrincipal Financial GroupPrincipal Financial Group is a publicly traded corporation based in Des Moines, Iowa, USA.The Principal Financial Group is a global financial services provider which offers a wide range of financial products and services, and is a U.S. leader in 401 plans. Headquartered in Des Moines, Iowa, the...
(Not Mutual) - Prudential Insurance (Previously Mutual)
Japan
- Chiyoda Mutual Life Insurance Company
- Daihyaku Life Insurance Company
- Daiichi Mutual Fire & Marine Insurance Company
- Nissan Mutual Life Insurance CompanyNissan Mutual Life InsuranceNissan Mutual Life Insurance Company was a Japanese company that went bankrupt on April 25, 1997. It was the first time since the postwar period that a life insurer went bankrupt....
- Toho Mutual Life Insurance company
- Tokyo Mutual Life Insurance Company
External links
- NAMIC – National Association of Mutual Insurance Companies
- ICMIF – International Cooperative and Mutual Insurance Federation
- AFM – Association of Financial Mutuals (UK)
- Reorganization Status of Mutual Life Insurance Companies (USA)