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Traditional Insurance Companies vs. Mutual Insurance Companies

  • admin
  • April 17, 2013 1:22 AM


A Bank is to a Credit Union as a Car Insurance Company Is to What?

Just as banks and credit unions differ, so do privately held auto insurance companies and mutual insurance companies. While the different organizational frameworks could affect your insurance premiums, the rate you get could also be influenced by other factors.

As with credit unions, you can sometimes get a better auto insurance rate from a mutual insurance company than you can from a regular insurance provider. But just why is that? Well, the reason is based on the organizational structures of each.

The Mutual Car Insurance Company Defined

The mutual insurance company is one that is owned by the policy holders. Profits earned by the company are rebated to policyholders in dividends or in lower premiums.

The Traditional Insurance Company

This is often a publicly held company where investors by stock in the company. In return, the profits generated, are distributed to the investors. Policy owners that aren’t investors don’t receive any financial benefits to their costs.

The Mission is Different

A Mutually owned insurance company sometimes has a different mind-set than the stock insurance company. Their focus is the policy holder, and they want to guarantee maximum benefits to a policy holder. Additionally, this type of organization is not under pressure by investors to take short term risk ventures. In essence, this framework is organized so an insurance organization can keep long term safety in mind. These facts show why auto insurance policies with a mutually owned insurance provider often receive better benefits, terms and rates.

Should I Go With a Mutually Owned Company?

Well, according to Forbes, this is only one aspect of an auto insurance company’s success. They suggest that the overall organizational framework also influences costs. This is influenced by other insurance products the company sells, their current customer base, their mission and focus.

For instance, State Farm is a highly successful insurance company, yet it is privately held. By the same token Amica, a relatively new provider on the insurance market is very successful in its mutually held organization.

It’s The Service that Makes a Difference

A leading global marketing information services company, JD Powers and Associates, suggests its less about the type of insurance company ownership, than it is about customer service and satisfaction. Remember, we live in a very competitive world, and insurance companies, both privately held and mutually held are fighting to get your business. To do this, insurance organizations know they need to keep auto insurance prices and their services competitive.

How Do You Go About Getting the Best Rates?

You must realize that insurance is not always about the price, but it’s also about the service. It does you little good to contract with an insurance provider that offers you little else except for price. You also want a conscientious company that offers great customer service, convenience and satisfaction.

To find the right policy with the coverage you want at the price you can afford, you should start your search online. Get comparable quotes and then make your decision based on the service and customer attention offered.

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