Mutuals face increasing pricing pressure, must differentiate themselves: Willis

Mutual insurers looking to remain competitive in the wake of enormous pricing pressure must differentiate themselves, David Thomas, CEO of market services and solutions for Willis, recommends in a new video blog.

“In this environment, (mutuals) must emphasize how they differ from the competition in terms of understanding the dynamics of a homogeneous book of business, and how their risk management and claims services are bespoke to the needs of their clients,” Thomas notes in the blog. “If they do these things well, I think that they can weather the current environment,” he says.

John Haydon, executive vice president at Willis Re, suggests that analytics will prove critical to mutuals, which, by their very nature, tend to be relatively undiversified.

“Mutuals usually have a particular geographic territory or membership base that means that they are narrow in focus when compared with a typical commercial lines carrier,” Haydon explains. “As a result, they tend to suffer when being considered from a Solvency II or rating agency standpoint. This means they must use all of the tools at their disposal, such as analytics, to minimize that disadvantage.”

Thomas points out that “mutuals generally take a long-term view of their customers, so tend to create a stable product over a long period of time. As a result, there are periods when mutuals’ pricing is considerably cheaper than the commercial market, and other periods when they are more expensive.”