Why Should I Choose a Mutual Insurance Company? - NYCM Insurance Blog

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Jul 10, 2023

Why Should I Choose a Mutual Insurance Company?

Do You Know the Hidden Benefits of Choosing A Mutual Insurance Company? Read On to Learn How It Affects Your Bottom Line

You may be asking yourself what a “mutual insurance company” is and what are the benefits of doing business with one. Most insurance companies perform the same basic function of selling insurance policies to their customers. But the differences may lie in what business model those companies use, which can even go on to effect a customer's bottom line.

A mutual insurance company is one that is owned entirely by its policyholders. Mutual insurance companies tend to make reliable and conservative choices when it comes to investments or long-term decision making. They also tend to be very customer-centric as their
premiums aren’t driven by stock market pressures, as opposed to what a stock company’s prices would be. Continue reading to learn more about the benefits of choosing a mutual insurance company!


Premiums and Earnings

Under a mutual insurance company, income is not reliant or driven by the stock market--which means that prices may be near or at cost! While all insurance companies earn income by collecting premiums from their policyholders, the difference lies in how those earnings are spent: rather than using the earned income to pay dividends to its stockholders, a mutual insurance company pays off debt or reinvests its earned income back into the company itself. Mutual insurance companies also use surplus profit to support discounted rates on future premiums. This allows them to keep customers happy by providing more consistent pricing overall and avoiding large rate increases.


How Investments Are Handled

It’s important to know that mutual insurance companies are not traded on stock exchanges, therefore their investment strategy avoids the pressure of having to reach short-term profit targets. Mutual insurers are often more long-term focused and take a much more conservative approach towards assets when it comes to investing. In contrast, other companies may be under pressure from their investors to maximize profits, and are often more concerned with short-term results which can mean they invest in riskier assets. This can mean that mutual insurance companies are less likely to hit bumps in the road with the ups and downs of the stock market, making it a more reliable choice for consumers overall.


The Bottom Line

As always when making a financial decision, you will want to assess as many factors as possible in determining what is best for you. While stock companies place ownership into the hands of anyone who owns a share of the company, one key difference when considering which is right for you may lie in a personal touch. Mutual companies, such as NYCM Insurance, are known to prioritize service to their policyholders. For more information about an insurance policy with NYCM, check out the link below to talk to one of our trusted agents!