Successful mutuals embrace not-for-profit philosophies, which focus on core social issues. Product offerings and locally led community sponsorships are directly linked to these issues. This approach promotes stronger engagement and brand awareness and is usually managed through corporate-owned investment frameworks. Typically, face-to-face distribution is used as a catalyst for local connectivity.
Mutuals serve as a curator between members, local businesses and the community through:
- Sponsoring local businesses so they can better serve the community
- Providing access and coverage to underserved and marginalized customer segments
The latter group is particularly important given the societal attention being paid to income inequality and the savings and protection gaps that were exacerbated by the pandemic. In addressing underserved market niches, mutuals often use social KPIs to measure their impact. Those KPIs can include the number and percentage of insureds who are:
- Below the poverty line
- At or above retirement age
Individuals in these groups are often excluded from insurance services or struggle to access affordable policies.
Social investment ratios are another common metric. This social KPI measures the resources insurers commit to information, education, communication and prevention in the local community, for which no direct financial returns are expected.
It’s worth noting that many mutuals select their community initiatives by measuring either the direct or indirect returns on their investments. Here again, purpose and financial performance are not mutually exclusive.
The mutual maturity model
Following our research, we created a mutual maturity model based on the core competencies of market success for organizations, including:
- Community orientation: strategies focused on core social issues and strong engagement models
- Policy and product differentiation: monitoring and anticipation of member needs and ongoing innovation in product design and offerings
- Value-adding services: alignment to member needs and overall purpose and measurement of ROI
- Member engagement: emphasis on mutuality in branding and ongoing communication and member input into company changes
- Financial benefit: consistent delivery of value (e.g., cost savings, dividends) aligned to strategy and designed to boost engagement
We used these core competencies to gauge overall maturity of mutuals in six markets – the US, Canada, the UK, France, Switzerland and Australia. Our findings show that Australia, Switzerland and the UK are the most mature markets, while US mutuals lag, particularly in the area of providing value-adding services.
The bottom line: the moment for mutuals
As with stock carriers, mutual insurers find themselves in a unique position in the post-COVID-19 market. Indeed, now is the time for mutuals to be bold with their growth strategies, identifying new opportunities where their purpose-led brands can gain traction and new segments they can serve. They must seek to harness the differentiating power of their purpose and customer-centricity to meet the moment. Thanks to the increased awareness of the savings and protection gaps, economic inequality and the emergence of stakeholder capitalism, all insurers – but especially mutuals – can demonstrate their value and relevance at greater scale than ever before.