With the benefit of hindsight the end of the era during which mutual groups dominated the life insurance space has been a disaster, according to former financial adviser and founder of Alliton Capital, Barry Daniels.
Pointing to the recent success of mutual in overseas jurisdictions, Daniels said that, in hindsight, the post mutual era had been a disaster with the major banks announcing they were jettisoning their wealth/insurance arms and many like AMP restructuring and downsizing their adviser networks.
“Industry and consumers are justified in asking what exactly has been the benefit of industry vertical integration and government intervention,” he said.
Daniels has produced a white paper in which he is arguing that the re-emergence of the mutual insurance model represents the answer to the industry’s future viability.
“For mutual companies to succeed they need to be aligned with the best interests of their policyholder members. What’s more, mutual companies are owned by their policyholders, not shareholders – and that’s a very important and crucial distinction,” Daniels said.
“Mutual companies share their profits with policyholder members, look after their interests and needs first and develop products and services accordingly. This differs from the current bank owned model that sells and markets products to generate profits/dividends for their shareholders without necessarily benefiting policyholders.”
To sustain his argument Daniels points to the success of the mutual model in other jurisdictions with the mutual and cooperative insurance market being deemed by the Cooperative and Mutual Insurance Federation to be the fastest-growing part of the global insurance industry.
