Is there still a place for Mutuals in the Life Insurance Marketplace?


By Chris Grove, Partner Forster Chase Corporate Finance

I haven’t written an article in some time mostly because to be honest I have very little time nowadays - The combination of several different businesses to run, a new baby and of course a global pandemic to contend with it has pushed article writing to the back of my list of things to do. I have though of late been talking about, thinking about and working with mutual insurance. 

For many years now I have been involved in the UK mutual insurance market. My company Forster Chase Corporate Finance is currently involved in several different transactions and is retained by several UK mutual insurers. It is an industry for which I have great affection, I think they offer something that is very different to the commercial insurance world and whilst it can be a slower moving world it has the right intentions to look after its customer base. 

Over the last few years I have seen pressures increase on the smaller organisations within that world, as many struggle with capital and customer acquisition. Furthermore Covid has not been kind to that space either especially when it comes to re-insurance renewals, IT systems are difficult to either keep going or replace and talent can be incredibly hard to attract, not to mention regulatory pressures that most are feeling. 

I look across the market right now and see large amounts of consolidation both from within and without, I see external interests eyeing a lucrative market and I see some obvious potential profitable deals. Despite the squeeze, I still believe there is a strong place for mutuality within the UK insurance markets. I think whilst there are downsides, there are also clear benefits to members ultimately owning the insurance company. I also see a strong group of good people in difficult circumstances doing the best for member outcomes against prevailing headwinds. 

Whilst there are many mutuals that struggle with scale and perhaps even lack a little commerciality there are still many mutuals with some great ideas and some fantastic future plans. Although it may be hard to believe given current circumstances I think there is a bright future for some of these progressive institutions that are able to bring old fashioned values but with a modern digital savvy approach to the new world. I hope in the coming years we will continue to play our part in how the mutual market evolves, but more than that I hope we start to see how mutuality can be a real force for good across the insurance landscape. 

With the emergence of ESG as a major force, the younger generations placing more and more emphasis upon fairness and ethics in how they choose the businesses which they want to engage with, I believe mutuality stands to benefit greatly from these new trends. If mutual insurers can grasp these opportunities with both hands and develop innovative product lines such as lifetime ISAs and lifetime mortgages then I believe there can be an incredibly rosy future for the mutual industry. 

The difficulty of course with all of these types of opportunities is that it takes real vision, drive and determination to be able to really take advantage of the situation and grow a meaningful legacy in tougher times. Whilst this is not easy, I do see an abundance of talent in the mutual sector currently in what is hopefully a pivotal time in their evolution. 

I would love to hear other people’s thoughts as to how mutuality can evolve and fit into the modern financial services world. Do you believe it’s an idea that has had its day or is it an idea that has great attraction even now – and that with the right people and the right ideas can really challenge the status quo?