Mutual insurance
In a mutual insurance company, any distributed surplus funds is paid entirely to policyholders, whereas in a proprietary company (one with shareholders) a proportion of the surplus (typically 10%) is paid to shareholders, in exchange for the capital that they provide to support the business. A Mutual insurance company is an insurance company which has no shareholders but instead is owned entirely by its policyholders: this ownership either extends to all its policyholders or is restricted to certain classes of policyholders.Historically, insurance began in many countries mainly through a mutual (or cooperative) structure. The absence of shareholders makes it more difficult for the directors of a mutual to raise fresh capital, for example to finance any new ventures that they propose.
Their ownership rights typically include voting rights, for instance in the election of the board of directors and on any proposal to demutualise. In recent years, many insurance companies have gone through demutualization and become public companies in an effort, among other things, to enable them to acquire further capital. The global trade association for the industry, the International Cooperative and Mutual Insurance Federation, claims 206 members in 72 countries, in turn representing 400 insurers. Members of Arbeitsgemeinschaft der Versicherungsvereine auf Gegenseitigkeit e.V .
