Mutual and cooperative insurers (hereafter referred to as “mutuals”) are different from stock insurers; they are owned by, governed by and operated solely in the interests of their customers/members. They are ideally positioned to help solve many of the world’s most pressing socio-economic problems, from enabling economic development in both the richest and poorest countries of the world, through to helping societies prepare for the effects of natural disasters and environmental change.
Mutuals are suited for delivering microinsurance because:
Member ownership: Mutual and cooperative insurers are owned by their members who participate in the governance and long-term success of the organisation.
Holistic livelihood approach: Mutuals do not only provide insurance but take a holistic approach to the members’ welfare, by providing risk prevention and loss services, as well as education and community empowerment.
Needs-based: The needs of the policyholder are more accurately identified due to the close proximity the mutual has with its members and ensures an inclusive approach.
Not-for-profit: Costs are kept low and profits are reinvested back as benefits to members.
Long term approach: Mutuals do not have the short-term profile pressures that commercial companies have and are more able to make more long-term, value-based investments and strategies.
Track record of success: Mutual insurance has been in existence for centuries. Today, mutual and cooperative insurers represent 27% of the total global insurance market (2015). There are over 5,000 mutual and cooperative insurers worldwide, they serve almost a billion members and employ over a million people.
Empowering the individual: Members are provided with the opportunity to participate in the decision making process and product development which can impact upon their livelihoods.
Community-based: Trust is generated by strong community relationships, leading to a greater commitment by members.
Solidarity concept: The mutual model is prevalent as a risk-sharing mechanism in the informal sector.