International Cooperative and
Mutual Insurance Federation

The insurance industry is unique in that it doesn’t sell a tangible product it actually sells a promise to pay the policyholder should an event (usually an unfortunate one) befall the policyholder. That promise is based on TRUST and trust is an intangible asset that has to be earned. Trust is earned by being reliable and honest over a long period of time. This blog is focused on the history of insurance for a specific reason, to show why mutuals are more trusted and because this week, specifically Wednesday April 25, marks the 90th anniversary of the founding of ICMIF.

The basis of insurance, the sharing of risks, is inherently a mutual concept, so it should be no surprise to find that mutual insurers are the oldest in the world and the forefathers of insurance as we know it today. The earliest mention I have found of insurance was in the ‘Cambridge Medieval History Volume VI – Victory of the Papacy Chapter XIV – Commerce and Industry in the Middle Ages’ which talks about Guilds that were popular in Northern Europe in the 12th and 13th Century. Every Guild, whether they were social, religious, commercial or industrial, insured its members to some degree against accidents of life, death or immortality and some extended it to fire insurance. These Guilds grew rapidly in the 17th and 18th century as mutual aid organisations. They became know as Box Societies and then Friendly Societies and crossed the Atlantic where they became know as Fraternal Societies. These societies protected members against accident, sickness and death and were the forerunners of life insurance. In fact at their height of popularity in 1904 they insured 80% of the UK working population.

As to the derivation of modern day non-life insurance the roots can be traced back to the great fire of London in 1666. After which, the first mutuals, called Hand in Hand societies (named after the way fires were put out by passing buckets of water along a chain of people hand to hand) were formed. The oldest can be traced back to 1696 when the snappily named ‘Contributors for Insuring Houses, Chambers or Rooms From Loss by Fire by Amicable Contributionship’ was formed.

The oldest insurers that are still around today are all mutual, Gjensidige of Norway traces its root back to 1689; The Philidelphia Contributionship set up by Benjamin Franklin in 1752 is the oldest mutual in the USA and ICMIF’s oldest member is Købstaedernes Forsikring (KAB) from Denmark founded in 1761 and recently celebrated its 250th anniversary. Please let me know if you know of other old mutual organisations; especially over 250 years old.

This history of insurance, up to now, hasn’t mentioned cooperatives. This is because the Rochdale Pioneers did not set out the cooperative principles until 1844; ironically they were based on the rules of a local friendly society. The Cooperative Insurance Society was started in 1867 to write fire insurance for cooperative societies; and so began cooperative insurance.

This history is the reason why there are so many mutual insurers in Europe and North America and so few cooperatives; with the rest of the world being more focused on cooperative insurance. To ICMIF we see them as similar organisations with similar values. They are all, in fact, member-owned organisations that have one objective which is to serve and protect the customer.

I am sorry for the history lesson but I am frequently asked by people all over the world what the history of the mutual and cooperative insurance sector is. As with everything in life we all want to know where we came from. Where we come from dictates our mission, vision and values and our future strategies. Our members have a rich history and a mission as relevant today as the day they were formed, which is why so many are using their values as their unique selling point to differentiate themselves in the market. For more on this please see my other blogs – Does marketing our mutuality work? and How Mutuality sells Insurance.

There is much research and many articles written about trust and insurance and all of them agree that mutuals and cooperatives have a higher trust rating then the rest of the industry. I don’t think we have to look any further than our history, mission and values to see why this is so. The longevity that is so prevalent in mutual and cooperative insurers is the reason why people trust them; because a promise is only good if the organisation is still in existence to fulfil that promise.

Thank you for indulging me in this short history lesson, like everything in history there are differing views and I would love to hear yours or your stories relating to your organisation’s history. We are working on a Facebook timeline to celebrate our 90th anniversary and I hope you will participate in it when we launch it later this year.