The cooperative movement impacts the insurance sector in two ways: cooperative insurance that protects members of a co-op and insurance cooperatives like mutual insurance companies. Here is a breakdown of these two functions.
1. Cooperative Insurance
Members of a co-op, like a housing cooperative, usually need to secure their own co-op insurance. Most cooperative housing associations hold insurance policies that protect shareholders against damages, like an earthquake or sewer backups, that affect the entire building and common property areas.
A housing co-op’s policy may not cover losses and injuries that occur in an individual unit. A cooperative insurance policy helps protect a member’s belongings and the inside of their unit, including coverage for burglary and fire damage. With cooperative insurance, members of a co-op are fully covered.
2. Insurance Co-ops
Mutual insurance companies, while technically not cooperatives, apply the co-op business model in their focus on policyholders. Insurance co-ops assist those who buy and receive coverage, not external investors.
Through cooperative member-ownership, mutual insurance companies serve the interests of policyholders. Since they are not publicly traded, insurance co-ops avoid the pressure of turning a high profit. In return, members have the right to select management and receive excess premiums.
The goal of an insurance cooperative is to provide comprehensive insurance coverage at a reasonable cost. Even if a co-op like a mutual insurance company grows, it stays rooted in the members’ interests.
Key Facts About Insurance Co-ops
Insurance cooperatives give policyholders the power to elect board members and receive profits through savings programs and dividends. Check out these facts about insurance co-ops:
- Five of the top 10 largest insurance companies are mutual companies and serve 25% of the insurance market
- In 1752, Benjamin Franklin founded the first co-op in the U.S., a mutual insurance company
Some examples of insurance cooperatives include State Farm, Nationwide Mutual Insurance Company, Liberty Mutual and Mutual of Omaha
Co-op Associations in the Insurance Sector
Learn more about the organizations that support insurance cooperatives and mutual insurance companies across the globe:
- National Association of Mutual Insurance Companies
- International Co-operative and Mutual Insurance Federation
- Cooperatives for a Better World
- International Co-operative Alliance
NCBA CLUSA: Strengthening Co-ops Around the World
More than a century ago, NCBA CLUSA saw a need for resources and education to support the cooperative business model.
Since then, our partners and members have successfully advocated for more inclusive economies in more than 85 countries. In fact, in 2017, our programs impacted the lives of more than three million people.
Our mission is to engage and empower people to have a greater say in their futures. Read more about why NCBA CLUSA is the primary voice in the U.S. for those who use cooperatives to create a better world.