Mutual insurance

A mutual insurance association ( mutuals ) is one of the legally permissible legal forms for an insurer. The " policyholder " are members of and support the club. In exceptional cases, mutuals can also conclude individual contracts, the policyholder not members ( non-members insurance).

Legal framework

The mutuals is a particular legal form for insurance companies, namely an association that intends to insure its members according to the principle of reciprocity (§ 15 VAG ). This particular, permitted only for insurers legal form of mutual insurance companies is regulated in the third part of the VAG. In addition, various other provisions of the law on associations, commercial law, company law and cooperative law apply. Mutuals differs from the cooperative in that it is characterized by the objective, mutuals through the principle of reciprocity. In Germany cooperatives is denied the insurance business. Compared to the stock corporation, which dominates the capital element outweighs the personal element in the sense of a people club. The mutual insurance is borne by the needs of its members (§ 20 VAG ). This assures him near market and innovation. Similar to the decision-making body of the Annual General Meeting for the shareholders of a corporation the Association has for its members as the supreme organ of the members' committee, partly also called Annual General Meeting ( § 36 VAG ).

However, members can determine only a few VVaG the composition of the members' committee itself today. The principle of " reciprocity " among the members is to be found only in small VVaGs. For large VVaGs contrast, the relationship between the individual member and the legal person of mutuals is to understand.

In mutuals, there are simplified rules for small clubs, which have only one objective, locally or the persons referred to restricted in scope ( § 53 VAG ). Smaller clubs are sometimes very down to earth, local insurers, which are operated by small groups of policyholders for direct mutual benefit. These are not particularly rich in offerings, but very flexible and very specialized compared to large companies. The then valid for the entire insurance market regulations often go as innovations of these from ( Non smoking rates, medical insurance rates for vegetarians or the insurance loss of wind for wind turbines ).

Similar to mutual insurance, but no insurance companies or mutuals are not registered and registered associations that are, for example, worked as relief funds in health care. However, this may not guarantee their performance and should therefore not be always a certain compensation guaranteeing insurer. There is only now and then, to the extent compensation for damage if or how the club cash position allows a payout. In some cases, buy the clubs reinsurance with an insurer. In some societies a privileged membership is achieved by an increased contribution included in the guaranteed benefits through a traditional insurers (such as automobile clubs ).

History

Mutuals are the archetype of the modern insurer. The idea of ​​mutuals as a legal form goes back to James Dodson (1710-1757), who calculated the first age-related assessments for life insurance contracts. On his initiative, the first professional, working on a mathematical basis life insurers in the world was founded in 1762, also the first mutuals, the Society for Equitable Assurances on Lives and Survivorships. The first mutual insurance companies in Germany goes back to the merchant Ernst- Wilhelm Arnoldi. As Arnoldi in 1820, called the Gotha Fire Insurance Company of the German trade stand, today Gotha insurance to life in Gotha, he realized it the idea of mutual aid: All jointly bear the load of the individual. The policyholders are also owners of the company. Similar to cooperative banks do not exist exclusively capital -providing owners, which is why a continuous and independent of investors business policy in the interests of its members is guaranteed. Necessary business decisions can be made ​​and implemented quickly.

For a number of years around the world, a little delayed in Germany, converted more and more mutuals in public companies ( demutualization ). Here it is, come again and again to disagreements over the previous owners, the policyholders to be paid compensation. The Federal Constitutional Court in 2005 for this purpose in a judgment amendments to the laws prescribed (July 26, 2005 1 BVR 782/94 and 1 BVR 957/96 ), but requires no change to date of operations.

Economic Importance

The number of registered mutuals totaled about 300 mutual insurance companies, of which 220 are smaller and 80 "big" clubs. Mutuals set by its presence a key regulatory factor in the competition dar.

In the division property / casualty market share is 28% ( premium volume 1999: EUR 48 billion ) and in the life segment 23% ( 59 billion euros ). In the division of health insurance (total premium volume of 20 billion euros ) mutuals are ahead with 52 % market share in equity companies even unique. In the division property / casualty mutuals recorded a higher than average premium growth of 0.6 %, in the areas of even 9.4% and 3.0% in the category of patients. The average interest rate of the investment in 1999 of more than 179 billion euros was 7.4 %. Overall, the spread on the German market occupied premium volume to 58% on insurance companies with the legal form of joint-stock companies, 11% of public-sector insurance companies and 29% of mutual insurance companies, including their daughters.

The market importance of mutuals is also reflected in their business success. Economic success can be measured in figures. Mutuals have compared to public companies higher growth rates in the insurance contracts, are active in fields with lower risk, lower cost rates and have made ​​more profit. The balance sheets of mutuals, as measured by total assets, have higher growth rates, have according to a study from 1997 ( Farny, Cologne) in the case of property and casualty insurers more visible equity from, involve more hidden reserves and cover the remainder more solvency. VVaG use their gross income before taxes average 28% for the equity, while public companies only use 10% of this.

Advantages and disadvantages of the various forms

The economic success of mutuals is one of the key strengths of its legal status and the reasons for its extraordinary importance for the insurance market.

As a mutual insurance has no foreign owners who have claims to profits made, remain posted surpluses in the company or get the policyholders as members of the association benefit. On the other hand, a mutual insurance companies do not take on the capital market without further capital, but must generate the necessary safety measures from its own profits. This in turn restricts its ability to use profits to policyholders, a. In addition, a mutual insurance under this restriction does not expand his business without further ado, he must make the needed for additional business security means only from the existing business.

In international competition, the legal form of mutual insurance companies, however, proves more and more as an obstacle, so correspondingly ambitious VVaG strive conversions ( demutualization ) or holding structures.

Mutuals have the needed to hedge fluctuations in the insurance history security agent itself generate systematically, while public companies they can borrow short on the capital markets when needed. VVaG therefore hold regular high-safety funds before they build systematically; amounts only for this unneeded can be used for the benefit of policyholders. The structure of the safety means of mutuals must keep pace with the growth of the business step; extent of mutual insurance companies subject to barriers to growth. Therefore mutuals have in the field of damage / accident, on average, significantly above the target lying solvency, so have a variety of VVaG a coverage ratio of the actual solvency of between 250 and 450 %. In life insurance, the average is between 150 and 200 % and in the category of patients between 200 and 300 %. On the other hand, mutual insurance companies for these high reserves but no funding costs, as they are to be made by public companies in the capital market for recorded amounts to a considerable extent in the form of dividends. Therefore mutuals hold as much reserves as useful or necessary, joint-stock companies as little as feasible or possible reserves. If the mutuals grows evenly and has no major fluctuations in the insurance result, it can therefore offer insurance cheaper than public companies. On the other hand can be better performed by public companies high growth, greater diversification and balance of strong fluctuations.

So mutuals lead to a greater extent than public companies profits to equity, but no dividends to shareholders. In addition, provide for mutual insurance companies as an alternative to raising capital listed enjoyment rights. Another way to use the capital market, is through the creation of subsidiaries in the form of joint stock companies and the bundling of activities in intermediate holding companies. This offers even the possibility of an IPO when an adequate volume.

Working Group of the mutual insurance

About 60 German mutual insurance associations "of the mutual insurance eV working group" (ARGE mutuals ) are organized with headquarters in Cologne. The main purpose of the Working mutuals is to represent those interests of mutuals, which are based on their specific legal form. One of the objectives here is one, more involved the advantages of mutuals - thoughts into the public debate and reduce the disadvantages of mutuals over other legal forms.