Mutual insurers must differentiate to remain competitive

Thursday, 17 April 2014

Mutual insurers face increasing pricing pressure so must differentiate themselves to remain competitive, according to David Thomas, CEO of Market Services & Solutions at Willis.

Speaking in a video blog on WillisWire, he says: “Mutuals generally take a long-term view of their customers, so tend to create a stable product over a long period of time. As a result there are periods when mutuals’ pricing is considerably cheaper than the commercial market, and other periods when they are more expensive.

“At a time like this mutuals are faced with enormous pricing pressure. In this environment they must emphasize how they differ from the competition in terms of understanding the dynamics of a homogeneous book of business, and how their risk management and claims services are bespoke to the needs of their clients. If they do these things well, I think that they can weather the current environment.”

John Haydon, Executive Vice President at Willis Re, explains why  analytics are absolutely critical to mutuals, which, by their very nature, tend to be relatively undiversified.

He says: “Mutuals usually have a particular geographic territory or membership base that means that they are narrow in focus when compared with a typical commercial lines carrier. As a result, they tend to suffer when being considered from a Solvency II or rating agency standpoint. This means they must use all of the tools at their disposal, such as analytics, to minimize that disadvantage.”

Robin Swindell, Executive Vice President at Willis Re, describes the work his team has undertaken in researching the needs of mutual insurers, and also how Willis is involved in the wider mutual insurance industry.

He said: “We’ve spent a lot of time working to understand both what makes a mutual insurer tick and why they are different from their commercial competitors. Over that time we’ve formed deep and strategic relationships with mutuals, as well as with key industry representative bodies such as The International Cooperative and Mutual Insurance Federation (ICMIF). We’re very proud to be a Supporting Member of ICMIF and attend its conferences as well as providing thought leadership materials for its publications.”

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