Mutual and cooperative insurers outperform the industry

Friday, 14 December 2012

Mutual and cooperative insurers have been significantly outperforming other insurance companies in the period since the global financial crisis of 2007-8.

According to new research by ICMIF, the period between 2007 and 2011 has seen premium income for the world’s mutual and cooperative insurers grow by 25.4%, compared to 12% for the insurance market as a whole.

The global insurance market share held by cooperatives and mutuals has grown during the same period, from 23.7% in 2007 to 26.5% last year (2011).

The figures, which come from the latest Mutual Market Share 2011 study cover 99% of the world’s insurance markets. The study has been undertaken by research staff at the International Cooperative and Mutual Insurance Federation (ICMIF) and is due for publication during Quarter One, 2013. The 2011 data confirms the strong trend identified in previous years, which has seen cooperatives and mutuals consistently outperform the global market since 2007.

Shaun Tarbuck, ICMIF’s CEO, suggests that mutual growth witnessed since the financial crisis is due to higher levels of customer trust and satisfaction. “The growth in the mutual market could be seen as a reaction by customers against the greed culture propagated by shareholder insurance companies. Against the backdrop of the recession, customers are looking for better value and lower costs as traditionally associated with mutual insurers,” he says.

ICMIF’s research finds that recent growth by cooperatives and mutuals has been particularly strong in life business, where global market share increased from under 21% of the market in 2007 to exactly 25% in 2011.

There have also been strong performances in most regions of the world. Cooperative and mutual insurance market share increased from 27.8% to 33.3% in North America between 2007 and 2011, and from 22.6% to 28% in Europe. Cooperative and mutual insurers continue to make very significant contributions in other countries. Market share is over 40% in, for example, Japan, Germany, France and the Netherlands, and is also high in the USA, where cooperatives and mutuals enjoy a market share of 34.7%.

Insurance is the largest sector in the global cooperative movement, closely followed by agriculture, banking and retail cooperatives; and it employs more than a million people worldwide. The European Research Institute on Cooperative and Social Enterprises (EURICSE) in the 2012 edition of their recently released World Co-operative Monitor found that insurers contributed USD 977 billion of the USD 1,975 billion combined turnover of the largest 300 cooperatives and mutuals.

ICMIF’s data comes at a time when renewed interest is being shown in the cooperative business model. A recent study by McKinsey & Company, for example, found that cooperatives are better than publicly listed companies at growing market share. Speaking at an international cooperative summit in Québec in October 2012, McKinsey’s Global Managing Director, Dominic Barton told his audience, “The time has come for the [cooperative] model to be put forward and celebrated.” He called for a shift in the business world from a focus on shareholder values to stakeholder values.

Mr Tarbuck agreed with his sentiment, adding: “The numbers in the ICMIF Mutual Market Share study show that the shift has already started.”