The benefits of a mutual

Mutuals try to ensure that insurance premiums are not a drain on capital. They do this by passing back to their Members the surplus of a good underwriting year through reduced or returned premiums. This is the “mutual dividend” and results in the Member retaining more of their capital which is then available to the Members’ business. In contrast to mutuals, fixed premium insurers are most unlikely to pass back to their insureds the surplus of a good underwriting year.

Ultimate control of mutuals is in the hands of their Members whereas ultimate control of a commercial insurer is in the hands of its shareholders. The board of directors of mutuals is chosen by the Members of the mutual who elect the directors at annual general meetings. The board is responsible for the mutual’s policy and strategy. As the Members come from the same industry or profession as the board,  there is a commonality of interest between them.

As the board of directors of mutuals are usually non executive directors, the day-to-day management of the business is delegated to specialist managers. Thomas Miller is a recognised leader in this field and it manages SIMIA. The managers have an interest in providing a first class service to the Members of the mutual as they are remunerated under a management agreement with the mutual. Thomas Miller has a long term relationship with all the mutuals it manages.

Some Mutuals have existed continuously for more than 140 years. Fixed premium insurers have a track record of moving in and out of different classes of businesses depending on their profitability. Although SIMIA is a relatively young Mutual (it was established in 1986) it has offered insurance to solicitors continuously since 1986, and has provided the solicitors' professional indemnity market with stabilising capacity.