The idea of mutual insurance dates back to the 1600s in England. The first successful mutual insurance company in the U.S.—the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire—was founded in 1752 by Benjamin Franklin and is still in business today.
Mutual companies are often formed to fill an unfilled or unique need for insurance. In Australia’s case the need is as a result of the escalating premium costs, especially in Northern Australia.
They range in size from small local providers to national and international insurers. Some companies offer multiple lines of coverage including property and Liability while others focus on specialised markets.
A mutual insurance company is a corporation owned exclusively by the policyholders who are “contractual creditors” with a right to vote on the board of directors. Generally, companies are managed and assets (insurance reserves, surplus, contingency funds, dividends) are held for the benefit and protection of the policyholders and their beneficiaries
Mutuals aren’t a new idea; they have been around for hundreds of years. Whilst the concept is steeped in history, it’s more relevant today than it’s ever been. Mutuals offer a strong, stable and trusted alternative to traditional insurance companies with shareholders.
The mutual is operated solely for the benefit of the members. All members pay a contribution to the mutual which is used to pay claims and run the business. Members can attend Annual General Meetings and vote on important issues including who is elected to the board. The board makes key decisions such as what to do with any surplus after payment of claims, insurance premiums and administration costs.
Our mutuals offer a robust structure for claims and risk transfer, or as we call it; a redesigned approach to insurance.
