The mutual and cooperative business model emphasises shared prosperity, measuring success through the collective well-being of customers and stakeholders rather than solely financial gains. A key principle is profit sharing, where mutual/cooperative insurers distribute financial successes to members/policyholders, contrasting with stock-owned insurers who share profits with external shareholders. ICMIF members demonstrate their commitment through various profit-sharing initiatives, fostering ownership and belonging among policyholders. Examples include cashback days, with-profits funds, dividend payments, policy enhancements, refunds, special discounts, loyalty bonuses, and boosts to retirement savings, highlighting the sector's values of cooperation, transparency, and inclusivity.
One key principle of the mutual and cooperative business model exemplifies the ethos of shared prosperity, where success is not measured solely by financial gains but also by the collective well-being of customers and stakeholders.
At the heart of this commitment for many mutual/cooperative insurers lies the practice of profit sharing, where financial successes of the business are shared with members/policyholders. This provides a clear example of mutual differentiation and contrasts with stock-owned insurers who instead share any annual profits with external shareholders.
Through a number of case studies, we spotlight the efforts of ICMIF members, showcasing a range of initiatives where organisations have shared their annual profits with their eligible member/policyholders, underscoring their dedication to living their mutual/cooperative values and prioritising the interests of their policyholders.
Through this, ICMIF members not only distribute financial rewards but also foster a sense of ownership and belonging among member-policyholders, enabling them to benefit from the prosperity of their mutual/cooperative insurer.
The examples included cover a range of profit-sharing initiatives such as:
- cash-back day;
- with-profits fund;
- dividend payments and policy enhancements;
- refunds;
- special percentage discounts/premium reductions;
- loyalty discounts/bonuses;
- boost to retirement saving plans.
Each example serves as a testament to the values of cooperation, transparency, and inclusivity that define the mutual/cooperative insurance sector.
R+V Versicherung (Germany)
R+V Versicherung offers a cashback programme reward for its customers which have a favourable claims history and reimburses up to ten percent of their insurance premiums. On Cashback Day in 2024, it distributed around EUR 16 million in contributions for FY 2023, a notable increase from the previous year's EUR 13 million. Participation requires membership in a cooperative bank and a Member-Plus contract.
Sheffield Mutual (UK)
Sheffield Mutual Friendly Society generates investment returns for its policyholders through its with-profits fund.
The company pools members’ money together in its with-profits fund and this is then invested in assets such as commercial property, shares, fixed interest, cash, bonds and government gilts. The with-profits fund is managed to provide a low to medium risk investment, appealing to individuals with a more cautious approach to investing. The aim is to offer members a better return than a typical bank or building society account and offer a solution that is not as risky as investing directly in the stock market.
In 2023, Sheffield Mutual Friendly Society’s investment return on its with-profits fund was 9.0% and it is sharing a record amount of profit—over GBP 5.1 million—with its members.
Thrivent (USA)
Thrivent, a membership-owned organisation, returns value to its clients through dividend payments and policy enhancements.
It has distributed more than USD 3 billion in the last 10 years alone and in October 2023, announced it will give USD 542 million in dividend payments and policy enhancements, such as additional credited interest and reduced fees, to clients with membership in 2024.
As part of this record-breaking total payout, 77% of Thrivent's policies—over 2.1 million—will receive some form of dividend or policy enhancement in 2024, a 9% increase from 2023.
Folksam (Sweden)
As a member-owned company, Folksam’s surplus is shared with its customers, this includes in the form of a refund. The refund is based on the premium paid in the previous year and the size of the rebate depends, among other things, on Folksam’s surplus.
In 2024, Folksam will distribute SEK 433 million in refunds to more than 2.6 million of its customers.
GF Forsikring (Denmark)
Since it was created in 1967, the basic premise of GF Forsikring has been that its members should share in the profits for the year. Since 2015, this has amounted to more than DKK 1.4 billion.
GF Forsikring shares the year's profits with its members in the form of a special percentage discount which is deducted from the price of the insurance policies when they come to be paid during the year. For car insurance, the profit is 13.7% on average. For other private insurance, the profit is 6% – and for business insurance, the figure is 4%.
In 2023, GF Forsikring shared more than DKK 260 million with its members. In April 2024, it announced that members will once again benefit from a profit distribution of more than DKK 215 million and also avoid extraordinary price increases for the second year in a row.
LV= (UK)
LV= shares its success with its members through member bonuses.
In its 2023 financial results announcement, ICMIF member LV= (UK) reported it had returned GBP 30 million to eligible members in the form of member bonuses, which brought the total shared in this way to GBP 385 million since 2011.
NFU Mutual (UK)
As a mutual with no shareholders, NFU Mutual shares its financial success with customers.
It rewards its loyal non-life (General Insurance) customers for renewing their policies through a Mutual Bonus. For 25 years, NFU Mutual has provided a saving on policyholder's renewal premium, based on the number of years they have held each individual policy (for 2024-2025, this ranged from 5.5% saving for the 1st year of renewal to 10.5% for the 5th year or more of renewal). In 2023, the mutual rewarded customer loyalty by awarding GBP 244 million through Mutual Bonus.
NFU Mutual also shares success with customers invested in its With-Profits fund through a Mutual Investment Bonus. NFU Mutual's With-Profits funds, available to ISA, pension, and investment bond customers, have delivered strong returns over the past decade, showcasing the company’s dedication to providing value to its members.
In 2023, it distributed a GBP 54 million Mutual Investment Bonus to eligible With-Profits customers, representing a 1.5% increase in investments. The insurer has also announced further good news for With-Profits customers, as the Mutual Investment Bonus is being increased to 1.85% from April 2024.
Over the past five years, GBP 180 million has been added to investments through the Mutual Investment Bonus.
LB Forsikring (Denmark)
For many years, LB Forsikring has paid out a loyalty discount to members as its way of saying thank you to them as it believes without loyal members, there is no community.
Every December, the Board of Directors assesses whether the company can pay out a loyalty discount the following year and how much.
To qualify for the discount, members must meet specific criteria. The amount of discount a member receives is determined by various factors, including the discount rates set for the year, the duration of their home insurance with the company, and the number of other insurance policies they hold with the company.
A record loyalty discount of DKK 253 million (EUR 34 million) went to LB Forsikring’s members in December 2022.
Vaudoise (Switzerland)
Vaudoise is the only independent private insurance company with a decision-making centre in French-speaking Switzerland. It shares its success with its customers by redistributing its profits to its policyholders in the form of a premium reduction.
It has been redistributing non-life surpluses to its policyholders in the form of premium retrocession since 2011, alternating between motor and property/casualty insurance policyholders.
Since 2011, it has redistributed more than CHF 400 million in this way.
Royal London (UK)
Each year, Royal London aims to boost its customers’ retirement savings by adding a share of its profits to their plans which is known at the mutual as ProfitShare.
ProfitShare is a discretionary enhancement for eligible Royal London customers with unit-linked or with-profits policies. The allocation is considered annually and depends on several factors including financial performance, capital position, the risks and volatility of financial markets and the Group’s outlook.
In March 2023, Royal London announced a ProfitShare of GBP 163m (2022: GBP 155m) to be shared in April 2024 with over two million eligible customers who have life and pensions policies with Royal London.
PPS (South Africa)
One of PPS's profit-sharing initiatives, “Profit-Share”, allows its members to earn a share of the profits generated by the company. The more products they hold and the longer they participate, the greater their potential earnings.
The Profit-Share earned by members is allocated annually into their notional PPS Profit-Share Account. This account grows with investment returns and further profit distributions. The accumulated profits in this account become available to members upon retirement from the age of 60, subject to contractual requirements.
In 2020, PPS introduced the enhanced PPS Profit-Share Cross-Holdings Booster to address the evolving needs of its members. This booster rewards loyal members by making their Profit-Share work harder for them in the long term. It rewards members based on the combination of products they hold across different areas such as investments, short-term insurance, and medical aid, in addition to their life risk products.
In April 2024, The Group announced total profits that were added to its members’ notional PPS Profit-Share Accounts™ in South Africa and Namibia of ZAR 4.54 billion and that it had returned ZAR 6.12 billion in total benefits to its members in South Africa and Namibia in 2023, compared to ZAR 5.04 billion in 2022.
Achmea (Netherlands)
At the end of 2021, Achmea allocated approximately EUR 380 million from its reserves to limit the increase in basic healthcare premiums for 2022. Out of the EUR 380 million allocated, about EUR 300 million was charged against the financial result for the financial year 2021.
By contributing from their reserves, Achmea aimed to support the affordability of health insurance premiums for customers of several brands under its umbrella, including Zilveren Kruis, De Friesland, Interpolis, Pro Life, and FBTO.
The main reason for the expected increase in healthcare premiums was the rise in healthcare costs in 2022. Factors contributing to this increase included the expansion of basic health insurance coverage, salary increases for healthcare staff, higher prices, and increased utilisation of expensive and specialised medicines.
Capricorn Mutual (Australia)
In the 2021 financial year, Capricorn Society paid a record AUD 71 million to its members. Capricorn Society is the parent company of ICMIF member Capricorn Mutual: a non-profit mutual established to provide Capricorn Society members and their associates a competitive alternative to insurance. Capricorn Mutual offers market leading protections tailored to the motor trades industry.
For the first time, eligible members with risk protection provided through Capricorn Mutual shared in an AUD 6 million “Loyalty Rebate” in 2021. This unprecedented rebate rewarded members who have been with the mutual insurance company for three years or more.
Onderlinge ´s-Gravenhage (Netherlands)
When reporting its annual figures for 2022, Onderlinge ´s-Gravenhage reported that total premium income for the insurer had increased by 3% from EUR 114 million to EUR 117 million. This produced a profit after tax of EUR 14 million (2021: EUR 31 million) which led to the company making EUR 5 million available for-profit sharing.
The examples included in this article exclude instances where ICMIF members offered premium rebates during the COVID-19 pandemic, which primarily related to motor and healthcare insurance policyholders. To read about examples connected to the COVID-19 pandemic, please click here.
This article was posted in July 2024. To the best of our knowledge, all information included was accurate at the time of posting.
If you would like to have an example included or provide more detailed information on an initiative that is referenced in the article, please contact [email protected].
