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Mutual insurance

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Title: Mutual insurance  
Author: World Heritage Encyclopedia
Language: English
Subject: History of the cooperative movement, State Farm Insurance, History of cooperatives in the United States, Amica Mutual Insurance, Intentional community
Publisher: World Heritage Encyclopedia

Mutual insurance

A mutual insurance company is an insurance company owned entirely by its policyholders. Any profits earned by a mutual insurance company are rebated to policyholders in the form of dividend distributions or reduced future premiums. In contrast, a stock insurance company is owned by investors who have purchased company stock; any profits generated by a stock insurance company are distributed to the investors without necessarily benefiting the policyholders.

The concept of mutual insurance originated in England in the late 17th century to cover losses due to fire.[1] The mutual/casualty insurance industry began in the United States in 1752 when Benjamin Franklin established the Philadelphia Contributionship for the Insurance of Houses From Loss by Fire.[1] Mutual property/casualty insurance companies exist now in nearly every country around the globe.[2]

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.[3] In North America the National Association of Mutual Insurance Companies (NAMIC), founded in 1895, is the sole representative of U.S. and Canadian mutual insurance companies in the areas of advocacy and education.[4]

Mutual holding companies

The major disadvantage of the mutual insurance companies is the difficulty of raising capital.[5] In response to this issue, the "mutual holding company" structure was first introduced in Iowa in 1995, and has spread since then.[6] There have been some concerns that the mutual holding company conversion is disadvantageous for the actual owners of the company, the policyholders,[7] and observers such as the Center for Insurance Research have advocated that companies should fully demutualize rather than taking this partial step.[5]

In the 111th Congress, Carolyn Maloney sponsored a bill that she claimed would have protected mutual holding company owners. The measure, H.R. 3291, died in committee.

Mutual holding companies are one way to undergo demutualization.

List of mutual insurance companies



  • Tryg (owned 60% by the mutual company Tryghedsgruppen)

Faroe Islands




New Zealand



United Kingdom

United States


  1. ^ a b Wright, Janet; Virginia Wadsley; Janice Artandi (1994). The History of the National Association of Mutual Insurance Companies, A Century of Commitment, 1895–1995. Indianapolis, IN: National Association of Mutual Insurance Companies. pp. 1–5. 
  2. ^ "Association of Mutual Insurers and Insurance Cooperatives in Europe". AMICE. Retrieved 24 February 2011. 
  3. ^ "ICMIF Members list". Retrieved March 5, 2010. 
  4. ^ Wright, Janet; Virginia Wadsley; Janice Artandi (1994). The History of the National Association of Mutual Insurance Companies, A Century of Commitment, 1895–1995. Indianapolis, IN: National Association of Mutual Insurance Companies. p. 21. 
  5. ^ a b What demutualization means for policyholders.
  6. ^ Banstetter et al. (1997). The Mutual Holding Company: A New Structural Option. The Association of Life Insurance Counsel.
  7. ^ Rambeck R. (2001). Mutual Holding Company: A Shell Game Without the Pea. Insurance Journal.
  8. ^ Description of a mutual insurance company from Guardian Life

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)
  • University of Wisconsin Center for Cooperatives: Research on the Economic Impact of Cooperatives. Economic Impacts of Cooperatives › Financial Services > Mutual Insurance
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