Are Mutual Companies Cheaper?
At its simplest level, an insurance company raises funds from the premiums charged to its customers and then pools those funds in order to pay any claims that are made by its customers, it’s operating costs and dividends to its shareholders. Mutual companies are a little different, since they do not have shareholders seeking a profit from their investment they can pass on this saving to their customers. However, being a mutual company does have some drawbacks, without any shares to sell on the capital markets they can find it harder to raise the capital they need in order to expand. In order to strengthen this possible weakness, bodies such as the ICMIF have been formed to facilitate the collaboration between its members. Incredibly, the ICMIF now represents organizations with assets of over USD 1 trillion spread across 70 countries. Along a similar vein, the Association of Financial Mutuals is another trade body for mutual insurers in the UK with a membership representing 20 million c
