Thought leadership article
Cooperatives and mutual insurers face a longstanding challenge in accessing external capital. While stock companies can issue shares to raise funds, mutuals and cooperatives rely primarily on capital gained through retained earnings from premiums and returns on investments.
This reliance limits their ability to expand and innovate, compete with stock insurers, and meet regulatory solvency requirements, particularly in the event of significant losses. ICMIF members and Supporting Members have been addressing the issue of raising capital in innovative ways.
In 2016, ICMIF Supporting Member Swiss Re published a sigma report, Mutual insurance in the 21st century: back to the future? (with contributions from ICMIF), which examined the challenges and opportunities facing mutual insurers worldwide.
The report highlighted a range of options to access external capital, including borrowing and debt instruments, new mutual capital instruments, reinsurance, alternative risk transfer and insurance-linked securities (ILS). The report also included examples of emerging regulatory frameworks that enable mutuals to access external capital while preserving their member-owned structure…
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