Sadly the business world is growing ever more short term in its outlook. In contrast to mutuals, conventional for profit insurers today are controlled by financial types rather than those committed to more traditional values. Time horizons have shortened, commitments reneged on and standards have dropped. Analysts induce instant gratification and top line growth, and underwriting continuity is undermined.
In this environment it is easier for career executives to withdraw from difficult classes than build long term solutions as mutuals do. Unbridled competition is a very real issue, however the realisation that over the long term mutuals and cooperatives provide a more efficient, more consistent and broader protection to their insured members should never be forgotten.
At the heart of the difference between mutuals and conventional insurers is the question of capital. With constraints on policyholder capital, limited access to external capital, and regulators everywhere raising the bar, reinsurance is the most efficient and flexible form of capital available to mutuals. Properly managed, reinsurance relationships go beyond pure risk transfer and embrace concepts such as partnership, longevity and shared expertise, reflecting the mutual’s own special relationship with its members.
We have been privileged to be part of the growth and success of many mutuals and have learned an enormous amount about how successful mutuals are run and deploy reinsurance capital to best effect. Willis Re is ideally qualified to assist you in optimising members’ reinsurance capital to match your members’ needs and aspirations.