There are positives and negatives to both stockholder and mutual/cooperative insurers in terms of structure. Our current times, however, lend themselves ideally to the cooperative and mutual ethos with many people feeling like they “want to be there for their neighbour” said Matt Mosher, Senior Vice President of Ratings at A.M. Best, during the recent ICMIF Biennial Conference in October. “There is an extreme positive right now for the cooperative and mutual movement to build upon.” Also, Matt reminded delegates, 2012 is the International Year of Cooperatives which gives our movement even more momentum to build upon.
All insurers are working in the same environment and competing in the same space said Matt and so mutuals and cooperatives have to firstly get the basics right in the same way as stockholder companies but then they need to promote and use their mutuality and values based strategies to further their advantage.
The basics are product design, considering your customer base, providing high value services, customer service, claims handling. In terms of customer services Matt asked delegates to consider what additional levels of customer service they could provide in order to become a true service provider to their customer. Claims handling done well is perhaps one of the best things an organisation can do and can be the best possible advertisement as claims handling which is carried out quickly and fairly will always be passed on by customers’ word of mouth.
Another issue is underwriting itself. In his presentation Matt suggested that mutuals and cooperatives need to differentiate between good and bad risks and check to see if there are any weaknesses in their underwriting. People will want to be treated fairly and to be insured for their risk specifically and not be responsible for other customers who have or are bad risks.
The final issue mutual and cooperative insurers really need to consider is whether or not they have adequate pricing. This is not so much about making a certain level of profit but to have an understanding of where you need to be in terms of pricing to cover risks and ensure that the organisation can be sustained by the pricing being used; this has to be more than just following the pricing that is prevalent in the market.
Matt recommended that organisations need to know what their specific advantage is and to use it to stay viable in the market place. Again this comes back to what organisations are providing to their customers and what makes the organisation special. It has to be more than just saying to someone that they are a “member” of your mutual or cooperative organisation, it has to be special because of the service that is being provided and how an organisation distinguishes itself.
Matt urged delegates to consider how they do this? What do they do differently? This cannot be purely based on price. The service level has to be high as someone can always compete on price. The quality of service, if right, is something that is very difficult for a competitor to take away from you, he said.