Insurance: Escaping the Mutual Trap


Smaller insurance mutuals that want to take their promise beyond their communities and current customer base are invariably stuck. Without a platform for breakout other than mutuality, they need to trade-off current customer benefit for future customer benefit to build the risk capital for growth. This leaves them vulnerable to the competitive advantages of larger players.

Pulling the levers of breakout success – better products, better underwriting, greater efficiency, better service or marketing – requires consuming risk capital for innovation or a spark of brilliance. Some may have the spot of luck that delivers the latter, but usually smaller mutuals are outgunned by their larger rivals.

With a belief in the benefits of mutuality – and there are great examples especially in the health insurance space that deliver for customers – mergers or partnerships are a potential avenue to successful growth. It’s interesting to see how some mutual insurers are finding a path through with innovative corporate structures and mergers as reported by S&P. As a company, we have the experience to enable combinations in insurance to the benefit of all stakeholders.