Mutual Company

Mutual Company A mutual company is a private firm that is owned by its customers or policyholders. The company's customers are also its owners. As such, they are entitled to receive a share of the profits generated by the mutual company. Mutual companies are most often insurance companies. Each policyholder is entitled to a share of the profits, paid as a dividend or a reduced premium price. Mutual insurance companies do not have external shareholders taking profits out of the business in the form of dividends. Any surplus produced by the operating activities of a mutual insurer is applied for the sole benefit of its Members. The primary mission of a mutual company is to protect members, by maintaining the capital needed to meet their needs and cover any insured losses, not to maximize profits for shareholders. Mutual insurance as a concept began in England in the late 17th century to cover losses due to fire. It began in the United States in 1752 when Benjamin Franklin established the Philadelphia Contributionship for the Insurance of Houses From Loss by Fire. Mutual insurance companies now exist nearly everywhere around the world. In the past 20 years, the insurance industry has gone through major changes, particularly after 1990s-era legislation removed some of the barriers between insurance companies and banks. Mutual insurance companies are not listed on stock exchanges, but if they eventually decide to be, they are "demutualized." As such, the rate of demutualization increased as many mutual companies wanted to diversify their operations beyond insurance, and to access more capital. The law of the jurisdiction determines whether an insurer can be a mutual insurance company or not. #benewinsurance #insurtech #inclusiveinsurance #insurance #reinsurance #takaful