Mutuality in Uncertain Times

In his address to the recent Unimutual 20th Anniversary Conference, Alan J Robb, an Independent Financial Commentator and Cooperative Business Consultant, takes a look at the challenges and opportunities for mutuals in the wake of the recent global financial crisis.

An alternative to being priced out of the insurance market

Today in the UK, new mutual insurers are being established demonstrating a market demand and the need by groups of individuals to look at alternatives to being priced out of the insurance market.

From The Association of Mutual Insurers website, June 2009

This is the dawning of the age of the mutual

A few years ago many commentators would have said that mutuals were going the way of the dodo as institutions rushed to access the capital markets.

Today, many suggest that mutual status has protected mutual firms from the excesses that overtook their quoted brethren.

From The Times, 3 March 2009

The time for mutuals may have returned

Modern mutual insurance developed with ship-owner groups in the eighteenth century who were dissatisfied with the cost and scope of the insurance available to them - and they successfully survive until today.

This may be because the availability and price of insurance can still be a problem.

So could other groups profit from following their example?

'Leaving the Back Door Open'

Why it's always good to have an alternative

Pilots working out their flight plans are trained to have an alternative – somewhere they have enough fuel (and reserves) to be able to fly to, if they cannot reach their original destination. It is called 'leaving the back door open'.

In creating risk protection plans, David Lloyd, a consultant with Regis & Partners, Perth, argues that the same thinking should apply – and that mutuals offer a sensible and practical alternative.