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Ben Telfer
Hello and welcome to today’s ICMF webinar. Today we’ll be looking at unlocking the value of mutuality in a dynamic market. We’re very pleased to be joined by ICMIF value supporting member EY and today we’ve got Duncan and Mahjoti to join us and present some research that EY did in collaboration with ICMIF a year and a half ago, and the report that was launched, the Global Mutual Insurance Market Scan. Today, they’ll share some of the main findings in that report, as well as going a bit deeper on some issues around value creation, scalability, growth and cost control.
So Duncan, Mahjoti, thank you so much for joining us today. I’m very pleased to hand over to both of you.

Duncan Meadows 
Fantastic. Thank you, Ben. Thanks for having us along today for the presentation. By way of introduction, I’m Duncan Meadows, based here in Canada, despite the accent, obviously a Brit by birth. I’ve been with EY for 13 years now working in the insurance space and I had the pleasure of working with very many mutuals and cooperatives, both here in Canada and in the UK and in fact beyond. And prior to that I’ve been working in the industry myself back in the UK. With that, I’ll let Mahjoti introduce himself as well.

Mahjoti Karimi 
Thanks so much, Duncan. Thank you, Ben. So, my name is Majoti Karimi and I’m a Senior Manager in EY’s Insurance Consulting practice in Canada. I’ve spent the last 15 years in the Canadian insurance industry across strategy, finance and consulting, working with our insurers and our clients on transformation programmes, modernisation and growth. So, I’m really excited to be part of the conversation today. Thank you for having me and I’ll pass it back over to you, Duncan.

Duncan Meadows 
Fantastic. Thank you. So, as Ben mentioned, we work in partnership with ICMIF, so we as EY and ICMIF together launched a Global mutuality report at the end of 2024 around the last ICMIF [biennial] conference and that was building on a report we did in fact in 2021 looking at the principles of mutuality.

And so today we’ll go through some of this content, some of our findings, but to give you a little bit of context of how this report came about. So, we did around 20 interviews with executives from around the world through a whole variety of different mutual and cooperative companies. We also did a survey of ICMF members. So, we had around 100 executives participate in a survey which we used as input into the into the report. And then finally we did a whole set of primary research, both financial, looking at trends, looking at products, services, how things were adjusting in the in the sector. So, we had sort of quantitative and qualitative research that went into the report. So that’s kind of how this report came about.

But today guys, we’ll share some of the findings, but we also want to hear from you. And today we’ll be using a software called Slido. You may be familiar, similar to Menti. And so what we’ll do, you can either go on the website slido.com and enter the code here 103025, or you can scan the QR code which is on screen with your phones.

OK, fantastic. So, a pretty clear, I would say, winning priority so far is a clear number one and how do you drive organic growth for your existing products and segments. So, focus on doing what you’re doing today to keep driving success and growth.
On current strategy, set #2 being enhancing member experience, which hopefully ties in well to a theme of today’s presentation. Fantastic. Thank you. So, if you keep this follow up though, there’ll be another question in one minute. So, if you just keep your phones or your web pages ready for the next question. But before I go there, so for today we’re going to go through four agenda items. So, one is around creating value as a mutual. Two is around addressing scale as a mutual. Three is how do you communicate mutuality to your members or your customers and four is around cost and driving cost performance.

So, if we’re starting with theme number one around creating value as a mutual, again, we’ll start with a question for you guys. So how does your mutual primarily define value creation today? What does value creation mean for you?

Fantastic. We’re above 20. I’ll keep the poll will stay open, but I’ll move forward to share results. So, a little bit more of a of a mix here, which is I guess what I expected. So, combination of profitability, profitable growth and capital strength, so financial aspect of this. Member experience being important here, having the right products that meet member needs, a range of value-added services. So, a bit more of a mix here in terms of how you define value creation. Thank you. Which, I think very much aligns as a nice bridge to our first slide around how do we see companies creating value as a mutual and we can define this really in kind of four dimensions and so really to create value, there’s a whole number of dimensions here. One is around customer value. So having the right products that meet customer needs, member needs with fair pricing, strong protection when it matters most and the right products and features there. Two, I’ll go to employee value, so I think when it comes to understanding mutuality, actually employees are super important here. So having employees who feel fulfilled and purposeful in their careers with great opportunities, super important. Societal value. So again, mutuals being a key contributing factor in societal, sustainable society, having local investment, community resilience, etcetera. So having societal dimension to everything that that’s being done to build a locally strong society and then finally that financial piece of having the right business model that balances competitiveness and resilience and those principles of mutuality. So, we have a business model that’s successful into the future. We see all of these factors being important in terms of what does value mean as a mutual.

If I step forward, if I think about kind of how in reality this value comes to pass and we’ll dive into each one of these in turn. So, we’ll have a view on products and services, have you on distribution, have you on customer segments and have you on supporting capabilities and how do each of these different dimensions add up to create value as we defined on the previous slide. So how do these different dimensions influence perceived value?

So, if we start with products and services. So, the older adage that insurance is sold, not bought, to make sure we have the right products, the right policies with potentially bundled solutions. We’re seeing more and more bundling being important and desire to kind of have a range of products that meet customer needs and service more than just one customer need. So, how do we make sure we have the right product suite so we can meet one or more customer needs with some level of flexibility? So having the ability to customise, and again, we’re seeing the rise of having more modular insurance products here that again can be can be more flexible for customers.
But, obviously again, insurance being sold, not bought, price competitiveness, not being the lowest price in the market, but having a fair and competitive price being super important still for mutuals to create value for members.

On the service side, we’re seeing lots and lots of, I’ve said the increased focus on service beyond just product and my service, there’s a whole range of things that we do here. So, in the health insurance space, for example, lots of gamification happening around kind of health partnerships, tracking health, rewarding health progress and having a chance to impact premium through that kind of focus and having a community aspect to it. Other services, there’s lots of loss prevention activity happening and risk mitigation. So, for example, in Canada here wildlife fires.
are an increasing problem and so how do having services around helping to protect and prevent wildfire damage around homes as well as things like more classic kind of electrical monitoring in barns on the commercial properties, so how do we reduce losses from happening in the first place? And also certainly in Asia, we’re seeing some good innovation around use of data, particularly farming data back to members. So, for farming members, for example, having data shared talks about crop yields and food pricing and going beyond insurance, data use for insurance to data. For those communities as a value-added service to help bolster and support those communities. So, lots of work happening in that service base beyond core insurance products.

That’s products and services. If we move on to the right sort of channel mix. So, we split this into two categories, those mutuals who own the customer relationship, so often through an agent network as well as kind of direct channels as well versus those who kind of connect to customers, to members through intermediaries. And so I think for those who do own their own distribution, we’re seeing a very much doubling down on leveraging those relationships, levering those agents to build trust with kind of regular touch points with those customers, making sure we have the deep relationships at a company level also personal level with those customers, but also we’re seeing that as the different generations coming through from a customer member perspective knowing that actually many younger generations do prefer to have digital options to access their policies be out through changes to policy features, be that through renewals, be that through the claimed experience. So, seeing an increased use integration and an optionality around digital experiences alongside those face-to-face agent relationships as well. So having that blend of personal and digital experiences that can then be tailored or optional choices made by customers and members in terms of how they want to interact, obviously losing data hopefully through that whole value chain and across those channels to understand our customers really well, what they need from personal level and how do we best tailor offers and messages to those customers and members for those who don’t have an agent network or don’t own the direct relationship with customers in the first instance, really seeing that there’s partnerships with brokers and other intermediaries being super important and we’re treating them like customers. So, giving them an excellent service and we know that having great service for brokers and other intermediary partners really helps them to promote your brand into the market and having their halo effect of mutuality being promoted and projected through those through those brokers. So having the right speed of response, having the right quality of service, the right data sharing in place, etcetera to really build that build that trust between these intermediaries.

And we are seeing again more how do we use other beyond partnerships beyond brokers into other affinity groups, other third parties, how do we do more B to B to C type of selling as well as embedded insurance type of offerings as well and co-creating experiences that that add value to members and customers in other ways beyond the traditional kind of face to face selling or and or renewal time. So that’s some of the things we’re seeing in in the in the in the kind of customer and distribution space.

If I move forward to customer segments then, and I’ll first just use this claimer, this is illustrative and this is not backed up by detailed research in terms of these specific arrows. But if we look at different target segments within your potential populations and I know on this call many folks will have different types of models, different customer segment targets but many mutuals will have some combination of younger policy holders, some sort of mass market or mass affluent group, some high net worth customers, maybe some members through affinity groups, maybe some going after commercial customers, be that farming or otherwise.

And thinking about what the value drivers of those segments and these things are interrelated, but we know that different customer segments have different value drivers. So, for example, Gen. Z may be heavily focused on having the right digital offering at a competitively low price.

Whereas potentially affinity groups may want to have a having a customised product with the right level of service for them. So, again just illustrative, but here thinking about for your mutual, your cooperative, what are those customer segments you’re going after and what’s the value driver, what’s the value proposition you’re going to give to those groups?

To drive value for them and thinking that potentially it’s better certainly as we move into a younger generation and some mutuals are moving into broader commercial business that one size might not fit all in terms of that value proposition. So, being clear on what’s that offering that’s compelling for those different segments.
And then finally from a from a supporting capabilities perspective, how do those help drive value? So from a tech perspective, we know that many, certainly in the PNC space kind of modern platforms and Guidewire may be common to many on the on the phone here are becoming more of a table stakes in the personal line space and even in the commercial space and so that’s not necessarily providing a competitive advantage, it’s more of a base minimum that is expected in terms of having a modern platform to leverage. So, it becomes more about how do you use the right data to support decision making through the insurance value chain to improve speed, accuracy, personalisation and access to insights? So, focusing on the data versus the technology itself. And also, we are seeing AI being used by experimentation. We’ll come on to that a bit more later on.

From a sales and underwriting perspective there’s, again in some places, certainly here in Canada, a battle of customer ownership with increased consolation in the broker space and so there’s that “how do we best access our customers with the right offerings, with the right speed and the right insights at the right price, using that data and AI enabled technology to provide a quality product at the right level of price and with the right level of service?”

In the claims space, again we’re seeing kind of I guess two lenses here. Certainly, again the human touch being super important to these processes. And so, we’re not seeing many insurance companies and certainly many mutuals going to a kind of a full touchless experience in these places. But it’s important to think about when.
When do we apply the human touch in the right ways at the right times? So, for example, that first instance of loss. Often people then want to have a conversation with a human and talk through what’s happened and have that have that human conversation. But how do we then streamline other processes around the claims and operational kind of journeys so that we focus our staff on the highest value and most valued experiences from a customer perspective? So, for example, use of automated note taking even automated field population.

In some of those conversations we’re seeing coming to the market more and more so that, for example, a claims handler can just focus on the conversation as a human, have a real human conversation versus having to be focused on the system and keying in data. We are seeing again tools coming to market that are being applied now in any insurance value chain that take some of that manual work and manual note taking entry away from adjusters and other stuff.

And then finally, people, culture and skills. So again, skills are changing fast. Many, many across the insurance market globally do have an aging population in some of the workforce. So how do we bring in new people to my workforce? How do we get them embedded in our culture? How do we get the right skills? So that’s an increasing focus and I’d say from a culture perspective, and I’ve done various visioning sessions with insurance companies, including on the culture side, and we’re seeing that customer centricity often comes as a kind of a key persona that folks want to try and boost that customer experience and again that comes with how do we have the right skilled staff with the right level of flexibility to provide differentiated experience and really boost customer experience alongside some of the automation on the less value added processes as well? So again, four different areas here that that we can think can come together to add and create value as a mutual. That’s a rapid overview. Maybe with that I’ll pass this on to Mahjoti to talk about the next theme.

Mahjoti Karimi  
Perfect. Thanks so much, Duncan. Very impactful insights on the creation of value across the value chain there. So, thanks for that. To kick off our second theme, which is addressing scale as a mutual, I want to start with a series of polls to get the audience’s input on this.

The first one is a bit of a simple question, but important one, and it’s what role do you think mutuality will play in your organisation’s future? So, if you have your Slido app up, if you can start answering, I’ll give you a moment to do that. And as you think about your answer, maybe just consider what mutuality or being a mutual means in terms of how you go out and compete in the market for new members or retaining existing members or how you go and attract and retain top talent or how you allocate capital. So, in other words, just think about the ways that mutuality shows up in the day-to-day decisions that your organisation is making. So again, I’ll give you a moment here to provide your answers and then we’ll take it up together. Perfect. So, we see a few answers already. So, one is market differentiator, which is very important. And what you’re essentially saying is that mutuality is core to how you compete. It shows up in the pricing, in claims and how your members are treated especially in the moments that matter. And so that implication is really important here. When mutuality is part of your competitive positioning, the expectations are also higher, right? So, service failures, inconsistencies, any perceptions of unfairness are felt a bit more acutely because members expect outcomes to align with values. So that’s a really good one. I see a couple of others here. So, talent attraction. So that speaks volumes in terms of mutuality being a cultural or a people advantage, right? Especially in an environment where there is this war on talent and there’s a strong demand for great underwriters, very strong claims staff, really strong distribution capabilities and what we consistently see and you know, Duncan covered it earlier, right, leading organisations take that purpose and translate it into empowerment as well for their people. And we’ll cover this a little bit later in terms of some of the obstacles. But how do we make things easier for people to make decisions faster, to enable clear accountability and give them the right modern tools to do their jobs well? So that’s really important and I see a couple of other themes here around the community focus like governance anchor and this all makes a lot of sense, the long-term approach and just framing this up a bit, right? Mutuality is about stewardship in many ways, so protecting the organisation from some of the myopic short-term thinking and reinforcing that longer-term thinking and resilience that matters even more in a volatile environment, whether it’s climate risk on the PNC side or capital market swings or broader geopolitical uncertainty. Uncertainty is sort of the name of the game in the modern environment, right? So, mutuality in this case acts as that anchor and that stabilising force. So, all that makes sense. So, thanks for all this input. This is great. We can move into the next question. So how bold is your mutual today? And as you answer this, let me maybe just to add a little bit of colour to that. I’m not asking whether you want to be bold, right? What I’m asking is sort of how bold do you believe your mutual is in practice based on the decisions that you’re making, decisions around people, around process, around technology, any risk appetite, partnerships? So, think across that sort of holistic lens and your evaluation of how bold your mutual is today. So, we’ll give you a moment to provide your answers and then we’ll take up the poll. And maybe as you provide your answers, I can sort of comment on the spectrum that we often see here. OK, perfect. So that looks like there’s, you know, this bell curve, which makes a lot of sense and I’ll touch on that. Maybe I’ll touch on the spectrum from the Super Bold to the least bold and we don’t see any fives here, but we certainly see some fours and a good proportion of that. And what that tells us is that you know your organisation’s is already steep deep into change. So, you’re, you know, not necessarily just experimenting around the edges, you’re fundamentally changing how the organisation is operating. Trading and the trade off to being super bold on that side of the spectrum is of course the execution risk, right? So, in a mutual, there’s sometimes less tolerance for, you know, some of these mistakes because you’re stewarding member capital. But the real test isn’t really whether the strategy is bold, it’s whether it’s sort of that governance and the talent and the operating model can actually keep up with that level of ambition. So, we’ll touch on that shortly and you know most folks answer in that middle of the road answer there with a three, that’s actually very common. It reflects that mindset of sort of that measured evolution, making targeted investments, maybe modernising certain platforms, piloting new capabilities in certain AI use cases, as we’ll touch on later or sort of pursuing selective growth. So, thank you for your input there. I think we can just transition into the next question, which is how bold does your mutual need to be to be successful in the next three to five years, OK?

So, I’ll give you a moment to answer this. Alright. So, the answers are the early indications are in, and we do see this bell curve that has sort of shifted to the right, right? So, it’s certainly a contrast between the answers that we received in terms of the current day assessment versus where you believe you need to be and this is very important and we’ll talk to how to address this but being very deliberate about where to be bold is also the next question. So often what we see is in technology and data in the operating model simplification or how mutuals are partnering while being very deliberate about how stability is an important strength as well, we’ll talk about all those pieces. And there’s this phrase that we often go through with our clients is, you know, earn the right to grow, which speaks to the need to ground bold bets and in strong fundamentals. So, you don’t want to lose sight of the underwriting discipline, the claims execution, the capital stewardship, you know, earning the right to grow, make sure you sort of maintain that grounded foundation.

All right. So, this is great. Thanks everyone for the input. We’re going to move right into the next slide, which is addressing the big question around, addressing scale as a mutual. So, on the horizontal axis, what you what you’re looking at is scale and product diversity range. So, on the left-hand side would be small focus players and then moving to large multi-line organisations and on the vertical axis is customer experience ownership. So how deeply do we actually own the member relationship in the top left-hand quadrant, and this is kind of where this four quadrants emerge.
In the top left-hand one, we call them the affinity specialists. These are typically smaller mutuals with a strong identity, so they’re deep roots in a given geography or a given member group, and they tend to create very strong loyalty and very strong trust because they know their members exceptionally well.
Now the trade-off is the risk concentration, so the narrow lines and the limited scale can often leave them exposed. So, whether it’s natural catastrophes, again as the example on the PNC side or regulatory change or sudden shifts in claims costs or you know any changes, significant changes and a macroeconomic lens can impact them significantly. On the bottom right quadrant, what we have is the large mutuals. So typically, they have broader product sets, they have a multi-line exposure, they have real opportunities for scale efficiencies, and the benefit is of course the stability that this group has and enjoys the multi-line diversification reduces the volatility and the scale helps absorb some of the shocks. But there is a risk here as well. So, as mutuals grow and scale to this quadrant, the differentiation can sometimes weaken. The member value can start to feel more generic or diluted and so that mutual identity can start to blur. So, the question for this group becomes how do we continue to maintain that as we scale up, right?

On the bottom left-hand quadrant is where the risk sort of really shows up the vulnerable niche. And that’s small scale without the strong differentiation. And so, these mutuals don’t have the advantages of scale, and it’s often difficult to pinpoint what the real compelling reason is for members to stay. And so, this is the danger zones, the high volatility, the limited resilience long term and increasing potential irrelevance in a market that is moving faster and faster every year. And so this whole view is intended to prompt some strategic reflection to help think about where your mutual’s North Star appears to be today and where that direction is going, because sometimes what we see is organizations don’t have that clarity and they’re just sort of an amalgamation of the individual decisions that brought them to where they are today with no clear lens on that future trajectory. But from our work and very clearly the data tells us that the large mutuals that are three times more likely to be multi lined than smaller, so the scale clearly matters, but what we’re saying here is that scale alone isn’t enough. So, the winners are going to be the ones that pair the scale with some intentional differentiation. And so that could be through the customer ownership, that could be through embedded services as Duncan covered, it could be through prevention, it could be through the extended trust-based relationships. Having that clear sort of North Star and deliberately moving towards that combination of scale and differentiation that fits the organisation’s identity is going to be the important factor to avoid drifting into that lower left quadrant.

OK, all right. So, we’re going to move into the next view here, which is common obstacles now that we’ve had that clarity of direction and avoiding that sort of that danger zone, the next natural question becomes how mutuals can overcome some of the structural or natural constraints that limit them in terms of scaling the customer value. So, on the left-hand side, what you see there is the common obstacles that we see. First is legacy systems and fragmented data. In many mutuals systems were built product by product or channel by channel and sometimes market by market and that the data technically exists somewhere, but it’s not easily usable and that limits personalisation. It constrains the amount of cross sell abilities. It makes advanced analytics or AI use cases in underwriting or claims or other areas much harder to deploy at scale. And so over time organisations tend to sort of compensate those through manual workarounds or through judgment overlays and individually those feel manageable, but collectively they drive up unit costs and slowed the organization down quite a bit. So, this is very common theme with what we see with our mutuals and in the Canadian transformation programmes, you know, what we see directly is the biggest gains often not come from new features but from removing friction and duplication in the existing workflows. So, the considerations are very clear on that piece, like simplifying the core systems, moving to cloud, embedding analytics across the functions will really allow mutuals to personalise experiences to a greater extent to improve the underwriting and claims accuracy and to operate much more efficiently as they kind of scale up.

And so that kind of takes us to the second piece, second obstacle around distribution reach and relationship ownership. So, mutuals very rightly value close trusted.
Member relationships. But scale often requires access to broader markets, right? New geographies, new segments or new ecosystems. And those don’t always come with direct ownership of the member relationship. And without diverse and efficient distribution, growth can sometimes be constrained by the geography or the channel concentration or the risk appetite. And so, an over reliance on a single channel can create that vulnerability if the market dynamics start to shift. So the tension or the question here isn’t, you know, direct versus intermediated, it’s about being more intentional about where ownership truly matters and where reach matters as well. So that’s the second piece around distribution.

The third obstacle is often capital flexibility, right? So, mutuals often rely on retained earnings to fund growth and modernisation. And that creates a natural inherent discipline in many ways, which is great, but it also limits the speed at which sometimes large investments can be deployed or initiated, so particularly in technology or expansion. And so, what the prompt here is that there’s alternative investment vehicles, there’s new business models that should be considered, there’s strategic partnerships that can help fund growth while preserving the mutual control and alignment to values. So, the key to that piece will be strong governance. So, the clarity on risk, the clarity on accountability and how these structures support rather than dilute the mutual mission will be really important. And when this is executed well, it gives the mutuals substantial optionality to the ability to grow without overstretching the core balance sheet. So, the overall summary of this is that there’s no silver bullet answer to scaling. But you know, it’s really important that there’s a disciplined focus around the modernisation effort, around diversification and collaboration and partnerships that collectively can help achieve the sort of.
Agility and the growth that many of the stock carriers enjoy but also maintaining the identity of a mutual.

All right, so that is the theme around the addressing mutual scale for a mutual. We’re going to move on to theme three, which is communicating mutuality. Up until this point, we’ve spent a lot of time talking about the scale. So, we’re going to start with a Slido question here, and that is around what is the most effective way, in your view, that mutuals can better communicate the value of mutuality? And so, I’ll give you a moment to answer this.

And we’ll take up the answers in a moment. I see a few participants already typing.
All right, great. We have some answers coming in. So, it’s certainly a challenge, which I love that answer. It’s there’s no easy questions or answers to this. Claims handling, absolutely. Client and partner experience, employees and culture, direct communication with members, policy docs. So, these are all really important communication channels. What else here? Community impact? Absolutely. So lived experiences of members. Really important to call that out. Members often want you to walk the talk as well. So, in addition to advertising, the lived experience is really important across claims and when they’re buying policies, et cetera, showing up in the community. So, this is all really great. This is a great setup. Thanks. Thanks for providing your input on this.

We shall go to the next slide and we’re going to take up, you know, this this view around communicating mutuality. So, the core question that we’re trying to answer here is around, how do we do we need to segment or do we need to tailor our messaging? And I think you’re all kind of understand and Duncan covered this in the value proposition for Gen. Z’s and other segments. Absolutely, it does matter in terms of how your messaging comes across depending on the group that you’re speaking to. So, if you look at the left-hand side of the slide, what we’ve done is sort of map how mutuality tends to resonate across different audiences.
These are over generalisations, but in many ways, they have an important ring of truth. So, starting at the top with employees and existing customers, those answers were given in the poll as well, mutuality matters significantly for this group. It creates that strong sense of ownership and loyalty. Employees often become advocates and long-standing customers feel value over time, so not just transacted with, which is really important, mutuality sort of reinforces purpose and trust here. It makes it very clear that the organisation exists to serve members and not, not shareholders in other structures. So, and that distinction carries a lot of weight internally as we move to kind of that middle view there, the younger customers, the affinity groups and partners, mutuality matters significantly but in a bit of a different way. And for this group often they’re aligned with the values around fairness, community and responsibility. The ownership model itself isn’t necessarily top of mind for them, but what matters is where the mutuality shows up in real benefits, so in real value, in greater reliability, or the visible social impact that it has. And at the bottom you see that you know the large commercial clients, mutuality tends to signal stability and stewardship, right? So that’s where it resonates best for them. That’s where, sort of reassuring in periods of volatility or broader economic uncertainty. There’s a big value here and but loyalty in this segment is earned primarily through performance. You know, the pricing, the service quality, the claims execution, the risk expertise. And so, mutuality supports trust, but that’s a key element there. So, it brings us to that right hand side of the slide, which is the practical levers that actually improve understanding and relevance. And so that first lever is around tailoring messaging and engagement. What that means is being deliberate about how mutuality is communicated for the core versus, you know, some of the other segments and localising messaging where the regional context matters and also moving kind of beyond formal moments like the annual general meetings, you know, the AGMs are a great tool, but using other channels, using digital channels to increase visibility and engagement, sort of making. It’s really important to highlight those moments that make a real difference in how the claims are handled and how crises are responded to and how capital is invested locally.

So that’s those are the moments where mutuality becomes more tangible and credible. The second lever is around making that more tangible view come to reality. So, when it shows up in the product features, when it shows up in pricing, loyalty comes back as an outcome as well. So, I mentioned this earlier around the lived experience becomes increasingly important for communicating mutuality.

And the third lever is around activating some of the internal and partner networks and we heard that in the polls as well. So, brokers, affinity groups, community partners can amplify the reach with the level of credibility that is often higher because they have that lived experience and centralised messaging sometimes can’t replicate that. So internally embedding mutuality into the onboarding and the training helps to ensure it shows up consistently in the everyday touch points and not just kind of brand statements. So, in summary for this theme, the core message is that mutuality is incredibly powerful as a differentiator and the most effective way to scale it is by being relevant, tangible, and credible to the specific group, and by being translated thoughtfully for each audience.

All right. With that, we’ve wrapped up theme three around communicating mutuality. So, I’ll pass it back over to you, Duncan, to cover the theme for around cost control.

Duncan Meadows  
Fantastic. Thank you Mahjoti. So, cost control. Here thinking in the in the broadest sense so both expense and loss. So maybe with apologies to any life and health players on the line, we can start with a kind of a PNC lens to help explain some of the performance we’re seeing over the last few years. So, if you look at the kind of the blue line on the left-hand side here, if you look at kind of the average combined ratio, so looking at expense combined with loss ratio from 2019, stock carriers and mutual carriers were because globally, were looking broadly similar in terms of the average combined ratio. So, stock carriers at 94.6 and mutuals at 96.0. So very close overall combined ratio performance globally pre pre-pandemic. What we’ve observed is that post pandemic, at least this is the 2023 data when we ran this with research, was there been a bit of a change in performance. So, stock carries actually improved their overall combined ratio whereas mutuals globally had deteriorated in terms of ratio. So, it could be a number of factors to this. It could be that that mutuals were less aggressive in terms of in terms of expense actions in these early days and the stock carriers were more aggressive on expense actions, so reducing kind of corporate cost. It could also be that mutuals were more forgiving in terms of in terms of loss and accepting a wider variety of claims and or were obviously maybe had a wider risk profile in their book. So, it could be a number of reasons for this, but we’ve observed that there is a marked change in global performance pre and post pandemic for mutual carriers versus stock carriers.

In our survey, in which we asked executives kind of how much they’re focusing on profitability and nearly 2/3 said it was a significant focus for them. On the other hand, more than half of execs also said they plan to increase staffing levels in the next 12 months. So, kind of a bit of a double-edged coin should we say in terms of the focus on profitability that we observed in in that study. So, it being a significant focus, but also, we’re seeing mutuals probably taking less action relative to stock carriers in this regard. If I move forward, then and this is kind of an EY framework that that we use to think about kind of cost control and profitability overall and we to break this down in simple terms kind of three levels of levers that we use when thinking about cost control.

So, at the top we have strategic levers. So, who do we sell to? What’s our client strategy? What’s our product strategy? So, what do we sell to those people? How do we distribute? What are those channels? How do we partner? How do we merge, etcetera? So that strategic levers at the top of the pyramid can be used to in terms of what we sell to who and how. Then there’s structural levers in terms of, for example, the org structure. So, what are the roles that we have in place, what’s the technology we have in place, what’s our location strategy, what are our legal entities, how do we do we use offshoring, do we outsource, etcetera. So some more structural levers and at the bottom. And there’s more kind of operational levers, so from things like process improvement, so data use for the public spend management, corporate spend management. So, more operationally, how do we, how can we improve things as well? So, there’s three levers. As we think about think about cost. And so, I’m going to ask you guys here and somebody may be familiar with this kind of concept, somebody maybe it’s maybe new to you, but would love to hear from your perspective in this question. Looking at these levers here, which levers do you believe are most aligned to mutuality and mutual value. So, if you’re picking levers here, which are the ones that you think most aligned to behaving like a mutual if you’re looking to control cost? So, I’ll give you another minute or two to answer this question. So, we’re looking at talent and org structure, looking at distribution strategy and channel strategy, process technology, digitalisation some of the top levers that align well with mutuality. Mixing new input. I see people are still typing. I’ll leave it open for another 10 seconds and we’ll move on to the converse. So, to prep you who’ve already finished, we’d also love to hear on the reverse side which levers are least aligned to mutual value or mutuality.

OK, let let’s go there now. Apologies for anyone who was still fiddling that in. Would love to hear which of those levers are least aligned to mutual value. OK, so outsourcing and offshoring. Interesting. Yeah. Third party control, spans and layers, mergers and digitalisation. OK, interesting is it’s kind of a featuring high medium-ish on both lists. Yes, I think this aligns well with what we’re seeing, 16 completed. I will, I think that will still stay open, but I’m going to move forward for the benefit of the slides of those who’ve completed it. So, I think our answers and your answers align very well. So, our perspective in terms of what we think is well aligned lever. So, we think the distribution channel strategy is super important. Whether you have a captive network or not, how do you get to market in the future is going to be increasingly important if there’s, as we’re seeing in many geographies, broker consolidation happening to make sure we have the right routes to market talent and org structure, yes, the right roles with the right skills in the right places. Fully agreed. Digitalisation we had on both sides of the list. We added that with an asterisk. So again, not to discount the need for human contact and the value that brings the mutual context. But yes, as generations come through, they’re going to need to have quality digital access both sales service and claims and I think process was on there as well on your higher up list as well. Added claims here as an asterisk as well that was our point of view. So, reason being again we do know that mutuals relative to stock carriers can have a wider risk appetite and a wider level of flexibility around claim payment and that can be a real value add as a mutual. Also, we know that there can be targeting and certainly around fraud and real erroneous claims payments. And making sure that we don’t have that type of activity happening while also allowing for and accepting that mutuals may take a wider risk and decision-making lens in terms of terms of claims.

On the less likely kind of levers that align with mutuality, fully agreed on the spans and layers and outsourcing and offshoring and those are your top two. So yes, those things don’t normally land well in a mutual context. Again, we tend to want to have the right skills and roles within the company and be able to go through more of a blunt spans and layers cost exercise. It’s more about having again the right roles with the right skills in the right places versus kind of more kind of role stripping activity around that. We also had from our kind of point of view some of that kind of that that that change and transformation kinds of levers. So, so reason being, I think going back to your answers around how bold are you today, how old you want to be, you know that many mutuals, that many insurance companies, also many mutuals are on that transformation journey needing to modernize further, to digitise further and actually yes, while we have to protect our member capital, we do need to invest for the future as well. So, making sure that there’s not kind of a short-sighted cutting of transformation budget so that we do make sure we modernise into the future. I see a couple of questions. I’ll try to move through the next bit relatively quickly. So, we have time for time for questions.

So, I’ll give a very summary level. We are seeing obviously AI used in insurance companies globally and we know that some mutuals are already on this journey. There’s obviously lots of activity early focus around kind of productivity and cost reduction. This is a kind of a global insurance lens here in terms of what’s happening. So that’s kind of the, I’d say the early focus is on some of those more RPA like activities. How can we drive productivity process improvement using Gen. AI and certainly Agentic AI. If I go to the right-hand side, how many use cases are really kind of identified in your firm? This research that we did, we found that actually, around 25% of companies, so around 1/4 of companies had identified 25% or more use cases, but many insurance companies are probably in the lower ends thereof
identifying or trialling a small number of AI use cases. I expect on this call there may be a whole spectrum here, but we’re not seeing yet, I’d say whole scale adoption of Gen. AI globally as well as in the insurance market. My hypothesis on the A I side is that overtime I think the some of the biggest benefits will come from underwriting and claims performance, less on the productivity side, more on the loss side. So, making sure we have the right insights around the risks we’re taking on is appropriately priced for the right information and then are we managing claims in the appropriate way as well and mitigating loss around claims. So, while I suspect there’s a nearer term focus on kind of the low hanging fruit around productivity, I suspect over time actually our biggest benefit may be on the loss side around how do we again underwrite the right risk, manage claims most effectively into the future,

I’ll skip this question in the interest of time, and I’ll just give a little quick use case here. And this is one we’re seeing. This is a use case from an insurance company, not a mutual, but just to give you a flavour of what we’re seeing at the more leading end of the market in terms of AI adoption. This is, so I’d say this is AI plus the digital transformation. This is a company that went kind of greenfield launched new technology from scratch. I’d say they kind of built the new ecosystem and infrastructure applying AI through that through that process. And this company went from kind of a, you know, a low level of self-service to a very high level of self-service. So, kind of digital deflection and a real strong digital experience. So, they had customers could again quote, buy and do claims online. Digital was their first point of access. Then that was supported by an A I chatbot. If you all didn’t follow that process and then moved into an AI enabled human chatbot and only after that they were then kind of given the kind of the human call options. So really trying to reduce volume of calls was part of that that kind of key hypothesis here. Not saying this is what mutuals should be doing but just giving you an example here of what some competitors are doing out there in the market and the impact that will have on cost and service. This company really went from a kind of a low-ish customer satisfaction score of 34% to a kind of relatively high satisfaction score. So, for their digital first model, they really proved out they could actually reduce their headcount in this case from almost 1,000 sales and service staff to kind of about half of that while increasing customer satisfaction and reducing cost. So, competitors certainly in the stock carrier space are taking initiatives like this around AI. Again, my hypothesis still remains that I think in the medium term we’ll see more underwriting and claims performance driven improvements versus more cost driven improvements, but we are seeing this sort of stuff coming to market and being now proven out by some leading carriers out there.

I’m conscious of time, so I won’t drain this slide, but again, just this is going to be left for take away. Some of the main kind of use case themes that we’re seeing around content generation and synthesis and content summarisation and extraction. Quick question answer and review on work and in the tech space kind of cogeneration and conversion, lots and lots of use cases there we’re seeing. Again there’s a long list of use cases that that certainly we as EY have got again working out what are the most valuable use cases to take to market and to and for carriers to really deploy the so that that that’s the it’s very easy thing about long list of use cases how do you deploy? But again, value is probably more of that more of the question.

That’s a very, very fast whiz through lots of themes. I see questions in the chat, but Ben, I apologise. I think we’re going to be out of time in terms of terms of Q&A. I’m afraid I can we can work offline on how we best answer some of the questions we’ve received. My final plug for handing back to you is just to say. So, the report is out here. In fact, there’s a QR code here of the report that we wrote about a year and a half ago. So, if you’re interested in that report there’s a there’s a there’s a QR code there and, we’ll have links set around as long as well as this content following the session. With that Ben, I’ll hand back to you. Thank you.

Ben Telfer  
Thank you very much, Duncan. And just to reiterate that, yes, we will be sharing a link to the report and how you can access the full report on the ICMIF Knowledge Hub. And also, we’ll be sharing more information in the coming months about an update and a refresh of some of the some of those insights to present later this year and to showcase at the ICMIF Biennial Conference in Toronto in November. As Duncan said, yeah, we didn’t don’t have time unfortunately for any questions, but please do share those after the webinar. Please share those with me or with anyone with the ICMIF team and we’ll pose those directly to the EY team and get them to get back to you.

I guess finally we’ve got an upcoming ICMIF webinar you can see on screen focus more on cyber risks and some insights and the latest trends impacting the cyber insurance market. So, details of how you can access that are also on screen and will be sent to you and can also be accessed through the ICMIF Knowledge Hub.
A final thank you all. Thank you to Duncan and Mahjoti for joining us today. Yeah, very interesting to hear any feedback you have. Please get in touch. If there is anything we can help to in terms of connections on other content, we have a number of further ICMIF resources all around mutuality, communicating mutuality, roundtable, so please get in touch because this is a very common theme amongst their membership and we can share some resources with you and links to further case studies and strategic intelligence. Thank you everybody. A big thank you again to EY. Thank you everyone for joining us today. Hope you enjoy the rest of your afternoon or evening? Have a good day, everybody. Goodbye.