Mutuals see permanent recovery

insurance mutuals

3 August 2016
| By Oksana Patron |
image
image
expand image

The mutual insurance market has been on the rise, with its popularity growing since the financial crisis of 2007/8, as policyholders retreated from stock-based insurers, according to Swiss Re's sigma report.

In its sigma report, "Mutual insurance in the 21st century: back to the future", the company said it had observed a permanent shift in insurance buying behaviour in a favour of mutuals over those listed on the stock exchange.

According to the report, a mutual structure also allowed for incentives to better align between customers and insurers and that mutuals tended to limit premium increments and accept more claims rather than "striving solely for profit maximisation". This often meant a better deal for the customers.

Additionally, their value was boosted thanks to their ability to compete not only on price but also on the value-added services they offered to the clients.

The report stressed that the rapid rise of the digital technology could also be "boon for the mutual model" as it seemed like a natural fit for purpose.

However, the regulators and their new-risk regulatory capital standards put some mutuals, especially smaller ones with a narrow regional or business focus, at a competitive disadvantage even though the mutuals were generally well-capitalised.

Mutuals were recently enjoying a renewed period of popularity driven by the premium growth from 24 per cent share of the overall insurance market in 2007 to 26 per cent in 2014.

The International Cooperative and Mutual Insurance Federation (ICMIF) chief executive, Shaun Tarbuck, said: "Mutuals, now more than ever, play a significant role in the rapid levels of innovation and growth taking place within the global insurance industry. It is very welcome to see the new sigma report from Swiss Re reflect this".

The ICMIF also contributed market intelligence to the Swiss Re report.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

This verdict highlights something deeply wrong and rotten at the heart of the FSCP. We are witnessing a heavy-handed, op...

1 day 14 hours ago

Interesting. Would be good to know the details of the StrategyOne deal....

5 days 20 hours ago

It’s astonishing to see the FAAA now pushing for more advisers by courting "career changers" and international recruits,...

3 weeks 3 days ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

2 weeks 5 days ago

A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments ...

4 days 18 hours ago

Pinnacle Investment Management has announced it will acquire strategic interests in two international fund managers for $142 million....

3 days 21 hours ago