The common cry for many years, particularly in the UK seems to have been "demutualise" (and take a quick profit!) but let me assure you that the mutual and co-operative movement both in the UK and the rest of the world is as strong as ever and still expanding. Perhaps this talk should be "in defence of mutuality".

I am pleased to be associated with ICMIF ( The International Co-operative and Mutual Federation) and let me confirm that they and their members continue to quietly continue to grow and expand their activities.

Some detail about ICMIF, a federation which is little known outside the movement and whose slogan is " A global reach for local strength".The ICMIF has a membership of just over 120 insurance groups from more than 65 countries. This has grown from the original five European co-operatives which came together in 1922 and expanded recently when there was a growth of more that 60% between the years 1992 and 2000. The assets of the membership represent about 10% of the world insurance market (life and non-life) and the income written about 8% of the global volume. But this is not the entire world picture because not all mutuals and co-ops belong to ICMIF, there is a rival organisation and the overall figures would be considerably larger if they were included. Fairly solid for a sector that some would have us believe has no future.

New mutuals and co-operatives continue to be formed around the world and the federations and associations willingly assist these potential new members in their development, providing technical and sometimes financial assistance. Developing areas of the world are particularly interested in the co-operative approach, perhaps reflecting the importance of agriculture in those areas.

But why are the mutuals and co-operatives still a force to be reckoned with, perhaps because they are more efficient and give more to their members than the rather disappointing Plc's.

Recently a comprehensive study was undertaken to compare Plc's and mutual performance. This involved a sample of 97 companies from 11 countries in Europe and produced the following comparative figures:

From this it can be clearly seen that mutual companies were more successful than their Plc counterparts in the second half of the 1990's. It should also be remembered that Mutual insurers generally have higher claims ratios that Plc's, indicating that more money goes back to policy holders per paid premium. This can be supported by the considerably lower expense ratios. I am pleased to be able to add that the current view is that their efficiency continues to increase to the benefit of their policyholders.

It is important to remember that the responsibilities of mutuals are focused on their policyholders and not as with Plc's to a bunch of shareholders, often to the detriment of policyholders. The concept of mutuality focuses on member and customer value, which results in good business performance, which in turn strengthens and promotes the mutual ideal, and which further, develops the principle of customer value! Mutuality was and is a self-reinforcing power.

Mutual insurance companies promote active policyholder influence, they are innovators of new products and services and they have actively demonstrated social commitment. It is well recognised that the mutual and co-operative companies have traditionally demonstrated a high degree of awareness of their social responsibilities to the communities in which the operate. This social responsibility has always been a vital element of mutual insurance practice and in the current business world, if anything, social responsibility plays a more important part in achieving business success than ever before.

We should not forget that the very nature of insurance is based on the concept of mutuality: risk is shared by the many to protect the few that suffer losses. What is more natural than such an economic risk-sharing activity being carried out by a company owned by the policyholders themselves - a mutual company?

Visit www.icmif.org

The above formed the basis of a presentation to the ISL "Gathering" on 4 July 2002 by ISL Associate Charles Catt. For further details, contact:

Charles J. Catt,
C. J. C. Consultancy Ltd.,
Consultancy, recruitment, arbitration, expert witness and training
for the worldwide reinsurance and insurance industry.
2 Crowhurst Oast,
Bells Farm Road,
East Peckham,
Tonbridge,
Kent,
TN12 5NA
UK
Telephone & Fax: ++ 44 1622 872654
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Email: Charles_catt@tcat.demon.co.uk