In a world where computers and technology-driven systems and processes are increasingly defining and determining customer and service interventions and outcomes, people-focused mutual organisations have a greater opportunity and capability to deliver a more personalised service for their members; one member at a time. This is, arguably, the difference that mutual organisations can deliver compared to many larger corporate competitors pursuing efficiency over personal engagement. The key for mutual organisations is to leverage this differential and use digital technologies to support their quality focus and not lose this advantage. These mutual organisations value people over profit.

In late 2021, an analysis of the competitive landscape and market forces for the UK’s financial mutuals and friendly societies has been conducted, involving interviews with 31 CEOs of Association of Financial Mutuals (AFM) member organisations, interviews and discussions with other key stakeholders, an online survey, and a programme of desk research and data analysis.

The AFM represents 43 insurance and healthcare providers throughout the UK that are owned by their customers or established to serve a defined community. Mutual insurers manage the savings, pensions, protection and healthcare needs of over 30 million people in the UK, collecting an annual premium income of approximately GBP 20 billion.

The analysis showed the overall financial resilience of the AFM membership remains strong, and organisations have withstood the challenging Covid-19 environment, whilst continuing to support their customers/members in times of need.

Key observations from this analysis are:

• There is a diverse AFM membership which demonstrates resilience in terms of member/ customer numbers and financial performance. In some cases, there are examples of AFM members that are outperforming the wider competitive landscape within which they operate.
• The purpose-led nature and mutual ethos of the organisations is well-aligned to the direction that society appears to be moving towards in terms of conscious consumerism and seeking to engage with organisations that offer more than just a transactional exchange.
• Commonalities exist across the AFM members, in areas such as the heritage and the ethos of mutuality, the appetite for collaboration and knowledge sharing, the developing importance of the ESG agenda, and in addressing future challenges to be faced.
• Clusters within the AFM membership can be seen in areas such as digital priorities, perception of sources of competitive advantage, and also future trends within the market sectors the organisations operate in.

Consequently, a number of strategic considerations are recommended for the AFM as a group, and for the individual member organisations to consider. These focus on the following themes, all of which support the future proofing of the AFM members and the wider set of financial mutuals across the UK and Ireland:

Promoting the mutual ethos

Championing mutuality in a way that resonates with current and future members/customers by articulating the benefits and value they receive as a member of a mutual and following through with delivery of these benefits: People over profit.

Strategic focus for growth

Understanding why members/customers choose the mutual option or not for profit organisations over shareholder owned competitors, and how these drivers might change over time.

Adoption of digital technology

Ensuring the organisation is clear about what role digital technology investments will play with regards to enhancing member/customer engagement, delivering specific benefits and efficiency gains, taking into account evolving member/customer needs and the wider competitive landscape

Non-competitive collaboration

Being open to and actively seeking the benefits of knowledge share, shared learnings, collaboration and potentially utsourcing, to support mutual values, service quality, operations and digital acceleration to ensure future survival and competitiveness.

Embracing ESG

Proactively engaging with the broad spectrum across the ESG agenda as a strategic discipline:

• Environmental – proactively reducing environment impact through energy use and CO2 footprint;
• Social – leveraging social and human capital across the business model, including diversity and inclusion;
• Governance – providing leadership, governance, and risk management with current and prospective members.

To help drive future prosperity and success, whether this is measured in terms of growth, benefits to members/customers, or elements of the organisation’s purpose, mutual insurers and friendly societies should focus on three key strategic areas:

1. Stay focused on the member/customer by assessing their understanding of the value delivered by the organisation relative to alternative offerings and don’t assume that the benefits members receive are understood by all. Conduct and/or refresh a structured analysis of customer insight, decision making and satisfaction criteria (with benchmarked performance) as a priority.
2. Make mutuality work for each organisation by evidencing a people focused approach and quality of engagement that gives people a reason to choose the mutual option. Specifically, use the member/customer insight generated to identify key value drivers identifying the benefits that customers truly value about mutual organisations.
3. Take away the reasons why people might choose not to use the organisation by taking actions such as: providing for digital needs; amplifying relevant customer experience through case studies and testimonials; using digital capability to enhance the people-centric ethos and approach; and providing meaningful links to social purpose and ESG.

Additionally, AFM’s members must ensure they focus on nurturing talent and supporting the wellbeing of their colleagues, who understand and deliver the value mutuals offer, and play such a critical role in the delivery of their purpose-led propositions. Throughout this report, a series of strategically orientated questions are posed of the leadership of the AFM members. Tackling these questions will enable AFM members to derive bespoke actions, in addition to the broader set of recommendations.

Thsi report is shared with ICMIF members with reproduced with the kind permission of the AFM.