What is a mutual?

An insurance mutual (sometimes known as a Club) is an insurance company that provides collective self insurance to its insureds, known as "Members".

An insurance mutual has no shareholders and is owned entirely by its Members who are also its policyholders.

Insurance mutuals are formed when policyholders decide to pool their risks together; and reduce the costs of their insurance by obtaining their insurance at cost.

Because mutuals have no shares to issue, they do not need to make a profit in order to pay dividends. Any surplus produced by the operating activities of a mutual is for the sole benefit of the mutual’s Members.

The management of mutual insurance companies is usually outsourced to a management company which provides all the services required to run an insurance entity under the supervision of the mutual’s board of directors.