A mutual insurance company is an insurance company owned entirely by its policyholders. It is a form of consumers' co-operative. Any profits earned by a mutual insurance company are either retained within the company or rebated to policyholders in the form of dividend distributions or reduced future premiums. In contrast, a stock insurance company is owned by investors who have purchased company stock; any profits generated by a stock insurance company are distributed to the investors without necessarily benefiting the policyholders.
The concept of mutual insurance originated in England in the late 17th century to cover losses due to fire. The mutual/casualty insurance industry began in the United States in 1752 when Benjamin Franklin established the Philadelphia Contributionship for the Insurance of Houses From Loss by Fire. Mutual property/casualty insurance companies exist now in nearly every country around the globe.
The global trade association for the industry, the International Cooperative and Mutual Insurance Federation, claims 216 members in 74 countries, in turn representing over 400 insurers. In North America the National Association of Mutual Insurance Companies (NAMIC), founded in 1895, is the sole representative of U.S. and Canadian mutual insurance companies in the areas of advocacy and education.
The "mutual holding company" structure was first introduced in Iowa in 1995, and has spread since then. There have been concerns that the mutual holding company conversion is disadvantageous for the owners of the company, the policyholders. The major disadvantage of mutual insurance companies is the difficulty of raising capital.
In the 111th Congress, Carolyn Maloney sponsored a bill that she claimed would have protected mutual holding company owners. The measure, H.R. 3291, died in committee.
Mutual holding companies are one way to undergo privatization, also called demutualization.
General Mutual insurance companies
Health insurance companies