Introduction
Mutual insurance is a form of insurance where the company is entirely owned by its policy holders rather than outside investors. This means that the profit that is generated through the mutual insurance company does not go to distant investors; instead, it is given to the participating policy holders. In this article we will explore the history of mutual insurance and the five important factors you should be aware of.
History
The first mutual insurance company to be brought into conception in America was by Benjamin Franklin in 1752 with 'The Philadelphia Contributionship.' This was a mutual insurance company that insured houses from fire related accidents. However, 60 years prior to this in England, a mutual insurance company of the same nature was founded. From these singular and humble beginnings sprung a concept that is now practiced worldwide. In America alone, there are at 100s of different mutual insurance companies or groups, highlighting the fact that this type of insurance is a popular and well utilised practice.
Features
In this section we will list five important things that relate to mutual insurance that you should be aware of. Also we will supply you with two examples of mutual insurance companies.
If you are a member of a mutual insurance company you have the potential to vote on who sits on the company’s board of directors, receive capital called policyholders dividers, or have a reduction in policy premium insurance costs.
Mutual insurance companies have a personal approach. Instead of being concerned about ensuring investors gain profits, they are more interested in providing premium insurance to their policy holders.
A necessity that needs to be fulfilled is a common reason why mutual insurance companies are conceived. A minority that share common needs are farmers, who have insurances necessities in relation to their equipment, land etc.
Mutual insurance companies, when they are founded, can either be financed with money from the policy holders themselves or from the aid of investors. If investors are sought, they are quickly paid off when the company starts to earn a profit.
If the mutual insurance company experiences losses that exceed their resources, the policy holders are normally not held accountable.
CAMICO -- this is a company that has a mutual insurance program. It was founded in the 1980s and is for certified public accountants. It has been highly successful and prides itself in offering stable mutual insurance for CPA's.
Mass Mutual is another prominent mutual insurance company. It is viewed as an financially reliable organisation, reflected in its financial strength ratings. These ratings depict the financial stability of a company, and Mass mutual consistently achieves high results with this test.
Tips and comments
- The size of mutual insurance companies can immensely fluctuate. From a small company that has a few policy holders to immense insurance companies that ensure numerous houses, businesses and cars.
- There are many mutual insurance companies out there, so research and find one that is best tailored for your particular needs. You could even create your own and involve a bunch of policyholders that share you particular insurance wants.
- Mutual insurance just means that instead of their being outside investors, the company is owned by the policy holders themselves. This makes for a more personal and less money orientated experience.
