New report outlines plan to ‘future proof’ financial mutuals

18 November, 2021

A new report published today by the Association of Mutuals and Whitecap Consulting highlights the key areas of current and future focus for mutual insurers and friendly societies, and provides a set of strategic considerations for the CEOs and boards of these organisations.

The Association of Financial Mutuals (AFM) represents 43 insurance and healthcare providers 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 £20 billion.

The report finds the overall financial performance of the AFM membership has remained strong over recent years as organisations have withstood the challenging Covid-19 environment, whilst continuing to support their members/ customers in times of need.

Key observations of the report 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 in the report, which focus on five key themes:

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 a mutual or not for profit organisations over a shareholder-owned competitor, 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 and shared learnings, as well as collaboration and outsourcing, to support mutual values, and enhance service quality, operations and digital acceleration, to ensure future survival and greater competitiveness.

Embracing ESG

  • Proactively engaging with the broad spectrum across the ESG agenda as a strategic discipline, covering each of Environmental, Social, and Governance

Martin Shaw, Chief Executive of the Association of Financial Mutuals, says:

“This is an important report at a key time for the mutual sector. Our members rightly took great pride at their capacity to support customers in the extreme conditions of lockdown, just as they have during several national emergencies over the last 200 years or more. But what emerges from the report is a recognition from the sector that, rather than rest on our laurels and assume the world will adjust to its pre-pandemic state, the forces shaping financial services, and the needs and expectations of consumers, are changing profoundly. The themes in this report gives us a roadmap to adopt to ensure the future insurance landscape retains a strong and vibrant mutual presence.”

Richard Coates, Managing Director of Whitecap Consulting, says:

“We are delighted to have had the opportunity to work with AFM, its members, associate members and other partners to conduct the analysis that underpins this report. In a world where computers and technology driven systems and processes are increasingly defining and determining customer and service interventions and outcomes, the people focused mutual organisations have a greater opportunity and capability to deliver flexibility for their members; one member at a time. The key for mutual organisations is to leverage this differential and use digital technologies to support this quality focus and not lose this advantage. These mutual organisations value people over profit.”

Jim Leggate, Head of UK Institutional and Middle East, Russell Investments, says:

“We have been delighted to support this initiative and contribute to the continued growth of a very important sector of the UK insurance industry. Since joining the AFM, we have been hugely impressed by the collaborative nature of the mutual sector as it seeks to meet the needs of its customers. We hope that members will find this research to be useful and insightful, and look forward to working alongside and supporting the sector for many years to come.”

The research has been conducted by Whitecap Consulting in partnership with AFM, and involved a quantitative data analysis of all 43 member organisations and interviews with 31 of the CEOs, supported by broader stakeholder engagement and an online survey.

The project was funded through sponsorship from a number of industry stakeholders: Altus ConsultingBenenden HealthCirencester Friendly SocietyCornish Mutual, Fidelity InternationalHolloway FriendlyMilliman, The Oddfellows (which includes Unity Mutual), PG MutualRoyal London Asset Management, and Russell Investments.



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