Shaun Tarbuck, Chief Executive of the International Cooperative and Mutual Insurance Federation (ICMIF) was recently invited for interview with global insurance news provide WRIN.tv. In the interview he commented on the growth in market share held by mutual and cooperative insurers, as reported in ICMIF’s Global Mutual Market Share report and echoed by Swiss Re in the recent sigma report: Mutual insurance in the 21st century: back to the future? He cites three main reasons for the growth of the mutual and cooperative sector: trust, improved marketing, and a greater customer awareness of the “mutual” alternative.
Tarbuck also addressed the key challenges as highlighted by Swiss Re in the sigma report for mutuals and cooperatives in new ‘risk-based capital’ requirements and evolving governance standards. Mr. Tarbuck sees the key issues as being those of solvency and governance and noted the key challenges for small and middle sized companies from the risk-based capital model. He suggests “proportionality” tests should be implemented within nations based on the business models in each country. ICMIF has produced guidelines to help regulators understand the mutual insurance sector with the publication: A practical guide to understanding mutual insurance.
Speaking on the topic of governance Tarbuck says “board balance” and independence are important, as are checks and balances on board membership, and the right representation of the respective affinity group. Speaking on the topic of gender balance, he says that mutuals are ahead of the industry average (17.8%*) with 21% of board members of mutuals/cooperatives being female, on average, and 18% of mutuals have a female CEO. He suggests that problems in governance are more prevalent in the shareholder-based insurance sector rather than the mutual/cooperative sector.
Tarbuck says “Big Data” will allow companies to get closer to their customers, to understand their needs, to be customer-centric…these are things, Tarbuck says, that mutuals have always done. Social media, smart analytics, coupled with customer engagement will enable mutuals and cooperatives to further tailor products focused on customer wants. He sees opportunities for mutual and cooperative insurers in areas like healthcare, long-term care, and pensions as governments pull back from these services. He also sees opportunities for the “mutualization” of risk in peer-to-peer groups that are emerging, like Lemonade and Guevara.
ICMIF launched the 5-5-5 Mutual Microinsurance Strategy in early 2015 to help build resilience in vulnerable communities. Over the course of five years, ICMIF plans to develop mutual microinsurance in five countries, reaching out to 5 million uninsured low-income households, which will equate to 25 million people in total. The five countries selected for the project are: Colombia, India, Kenya, the Philippines and Sri Lanka. Efforts have begun in India and the Philippine, says Tarbuck confirming that ICMIF plans to initiate efforts in Colombia, Kenya and Sri Lanka early in 2017. Mr. Tarbuck sees a two-way learning curve in countries which are beginning to understand how mutual insurance works and employing these practices within their own communities.
The interview took place immediately before the annual NAMIC Convention convened in Vancouver, Canada, and commenting on the North Americas region Tarbuck said he sees challenges for NAMIC members around scale and proportionality; regulation; and digitization. He also sees challenges in selling insurance to Gen Y and millennials through traditional means. Mutuals that are already looking to sell products in new ways will be the winners in the long run, Tarbuck says.
Watch the interview in full on WRIN.tv here.
*Data on the average women board representation of the insurance industry from MSCI ESG Research Women on Boards, ©2016 MSCI ESG Research Inc. Reproduced by permission.