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Risk and capital management of mutuals

The past one and half years have been anything but normal, and uncertainty remains elevated in the near term. Despite several vaccines having been authorised for emergency use, the roll-out of mass vaccination remains bumpy, hampered by supply constraints, a reluctance to vaccinate, and a recent resurgence of infection in key emerging markets. 

Throughout this unprecedented crisis, insurers have continued to support households, enterprises and societies through the provision of risk covers and paying claims. The pandemic is yet another occasion to show the value of insurance as a shock absorber to cushion the financial stress on households and corporations from catastrophic events. Nonetheless, the pressures on insurers are unrelenting, arising from dislocations of financial markets, economic recessions, lower interest rates, and a fast-evolving risk landscape. The need for robust insurance risk and capital management has never been more important. 

This much is true for mutual insurance – one of the oldest forms of insurance, which is estimated to have accounted for 26.7% of global insurance premiums in 2017, up from 24.0% in 2007. Globally, there are over 5,100 active mutual insurance organisations serving 992 million members or policyholders. Given the importance of the mutual segment and the protection they offer to members/policyholders, it is imperative that they are well-positioned to deal with challenges triggered by the pandemic and the resultant global recession. 

To this aim, ICMIF Supporting Member Peak Re partnered with ICMIF to conduct an online survey in March-April 2021 to understand mutuals’ risk and capital management needs and challenges. This report summarises the key findings. 

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