What is a mutual?
There is no clear definition of a mutual and in the EU, mutuals operate under a large diversity of legal forms, but all can be recognized by five main characteristics:
1. Mutuals are private legal entities
Mutuals are private legal entities, governed by private law.
2. Mutuals are grouping of people
Mutuals are grouping of people (natural or legal people), where the interests of people overcome financial interests of the organisation itself. Mutuals are solidarity based organisations and their main purpose in general is to cover risks, or to provide services, connected to human life.
Mutuals are not-for-profit organisations, although their financial sustainability is one of their main worries. Therefore, being non- profit oriented, they must also ensure financial surpluses.
Those financial results are not, in a large majority of cases, distributed to their members, but rather reinvested in the mutual activities themselves or used for social support activities in the interest of people in need.
3. The governance of mutuals is democratic
The governance of mutuals is democratic. In general, each member has one vote. Also, such principle can be operationalized via the use of delegates or interest groups.
4. The principle of solidarity is important among members
The principle of solidarity is important among members, often enshrined in law. Free entry of those fulfilling the conditions enshrined in the statutes as well as free exit of members is possible.
5. Profits are used for the benefit of the members
Profits are used for the benefit of the members, as the members are the owners of the mutual. Thus, the primary purpose of a mutual is to satisfy the common needs of its members and not to make profits or to provide a return on capital. Benefits can be in the form of discounts or rebates on premiums in case of insurance mutuals, investments to improve services for the members or the development of the business, or increases to its “own funds”. They can also be used for the benefit of society/community at large.
In health care assistance and social services, mutuals are estimated to provide services to approximately 230 million citizens.Most AIM members are mutual benefit societies, which are a specific type of mutuals that are involved in the delivery of health insurance. Depending on their member state of origin, they are involved in compulsory and/or voluntary health insurance and in some cases are entrusted with operating compulsory health insurance schemes. In addition, our members pursue objectives related to social protection and quality of life, such as social services and health care assistance.
In the majority of European countries, mutuals are allowed to operate exclusively in (re)insurance markets. This is the case in Austria, Bulgaria, Cyprus, Germany, Denmark, Finland (including statutory pensions), Latvia, Malta, the Netherlands, Norway, Poland, Romania, Sweden, Slovenia. In those countries, mutuals are insurers.
In Belgium, Greece, Spain, France, Hungary, Italy, Luxemburg and Portugal, a distinction is made between insurance mutuals and mutual benefit societies.
The importance of mutuals in Europe
Mutuals account for roughly 16% of the European insurance market (13% in life and 21% in non-life insurance) or around 180 billion euro in premiums. They manage around 1160 billion euro in assets and employ over 200,000 people. Some mutual insurers are among the largest insurance companies.
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