The Mutual Factor 2024, released today by the National Association of Mutual Insurance Companies (NAMIC) and Aon, details US mutual property/casualty insurers’ financial resilience in the face of multiple market challenges in this “New Era of Risk”. NAMIC and Aon released the seventh annual Mutual Factor report today during the association’s 129th Annual Convention in Denver, USA.

The report details that following a difficult 2023, severe convective storms (SCS) in the US generated the majority of global insured losses in the first half of 2024. The report notes that tornadic activity in the U.S. has been “remarkable” so far in 2024 and that USD 36 billion in SCS losses in the first half of the year is the second highest figure on record.

According to the report, cooling but continuing inflation, legal system abuse, and rate environment challenges added to the market pressures impacting mutual insurers.

“In this environment, mutual insurers face the combined costs of extreme weather, legal system abuse, inflation, rising reinsurance costs, and other economic uncertainty,” said Neil Alldredge, NAMIC’s President and CEO. “Despite these colliding challenges, the 2024 Mutual Factor report illustrates mutuals’ durability to deliver for policyholders when they face some of life’s toughest moments.”

As in past versions, The Mutual Factor 2024 compares performance metrics over the past 12 months and over a five-year time frame, in addition to AM Best credit ratings impact and new emerging issues.

“This report highlights both the difficult environment facing mutual insurers and their financial resilience,” said Patrick Abbe, Aon executive managing director, U.S. Regional and Mutual Strategic Growth leader. “The uptick in the mutual insurance segment’s capital position reflects its continued commitment to strengthen balance sheets and benefit both policyholders and the broader economy. Likewise, the increase in leverage ratios for the industry also demonstrates the challenging circumstances that mutual insurers are balancing – with the impact of the various weather, legal system abuse, and exposure increases outpacing surplus growth over the past 12 to 18 months.”

Among the key findings on financial performance:

• In 2023, mutual insurers recorded loss and loss adjustment expenses of 84.0% of premium compared to the five-year average of 77.3%. Other companies outperformed their mutual counterparts at 71.% for 2023, which compares more closely to their five-year average of 70.8%.
• In 2023, the industry grew capital and surplus by 6.1, a considerable shift from the 6.5 percent decrease in capital in 2022.
• The combined ratio for mutual insurers for Q2 2024 was 103.6, compared to 113.7 during the same period in 2023, largely as a result of what and where many do business. Other insurers saw combined ratios of 94.3 in Q2 2024 versus 100 in Q2 of 2023, reflecting their focus on returns.

The Mutual Factor 2024 concludes with a consumer opinion survey about the property/casualty insurance industry conducted by research firms Readex Research and Dynata, following a similar benchmark study by a separate firm in 2018. Key findings include:

• Of respondents familiar with mutual insurance companies, 88%said they were somewhat or very likely to choose a mutual insurance company for their next auto or home insurance purchase.
• 28% made a change in insurance company recently. Of those who made changes, 65% reported it being due to price of premium.