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Mutual insurance companies will have to reform their corporate governance practices if they want to avoid new and excessive government regulation. Steps they can take include: changes in board structure and composition, the addition of several committees, more open communication with policyholders, and greater involvement of the board in setting strategy.

Purpose – This chapter aims to show the similarities and differences that can be found in the destiny of cooperative banks and mutual insurance companies; these two industries, for reasons both similar and specific, are now “at a crossroads.” To reinforce this, we begin by tracing the history of cooperative banks and mutual insurance companies to better inform the future. Cooperative banks and mutual insurance gradually secularized and out of corporatism have patiently built-in different ways depending on the network as opposed to companies.

Results – This chapter will pursue these observations by identifying the impacts of recent crises in shaping business models by questioning a central issue which is that the trap values meet performance requirements in a fierce competition. Then, this chapter will end with the discussion on the main challenges faced by the mutual sphere; «She» should be replaced by «it». Could it exert a role in the crisis?

This study examines compensation changes among top executives of formerly privately held stock insurers and mutual insurers at the time around an initial public offering. This study explains how CEO compensation changes following an IPO differ between these two types of insurers owing to their differing agency characteristics. The results also show that CEOs’ benefits increase materially following an IPO. The authors find evidence that reduced ownership retention by managers increases agency costs and CEOs of mutual insurers exploit their positions and increase their reward at the expense of policyholders.

Economic security is one of the crucial dimensions of the welfare state. High-income individuals are able to purchase private insurance, but a large portion of the individuals remains uninsured. The authors have tried to rationalize the problem of the study over the reason why people remain uninsured. Hence, the purpose of the study is to identify an insurance model that can cover the risk of the heterogeneous segments. The study is qualitative in nature and applies a fuzzy analytic hierarchy process (FAHP). Based on seven criteria, process is applied to arrive at an alternative model among basic models of insurance, namely, conventional private insurance, mutual, and social insurance. Since social insurance has emerged with the highest score of 41% in the study, it is implied that social insurance works best in a situation where the market is full of private information and moral hazard. The findings reaffirm that government intervention is required in an insurance market to provide coverage to both covariate and idiosyncratic risks. The findings are especially relevant in the context of emerging markets where a sizeable poor population goes uninsured. The study contributes to the literature by proposing alternative insurance to address the problem of insuring the voluntarily uninsured.

The study analyzes different early African‐American life insurance enterprises and illustrates how these organizations significantly influenced both cultural and economic development in African‐American communities. Because African Americans purchased at least one billion‐dollars worth of insurance by the end of the 1930s and because African‐American insurance companies carried at least $340,000,000 of this insurance, African Americans also played a significant role in developing the United States’ financial infrastructure during the first half of the twentieth century. This paper explores the cultural and economic issues used by this industry to overcome the environment constraints that hindered many other African‐American industries.

Agency theory leads to proposals that managers of asset portfolios would not necessarily maximize net return on invested assets for any level of risk. Because investment income accounts for approximately one third of the total income of life insurers, the rate of return on invested assets can substantially affect an insurer's products and profitability. Prior research has shown systematic differences in general insurance expenses between classes of insurers, but continued viability of all classes of insurers through time. This study tests the predictions of agency theory and its alternatives concerning the investment yields of life insurers and finds offsetting differences in the investment results of these insurers. The study also finds significant economies of scale in the investment function that help explain what might otherwise appear to be an unjustified emphasis on firm growth. This study has important implications for participants in the industry, regulators, consumers and investors.

This paper aimed to analyze the ways in which Niklas Luhmann's theory of the functional differentiation of society can be applied to historical studies. To achieve this, a semantic analysis of the development of modern insurance in Germany during the nineteenth century was conducted.

Through an examination of the significant features of Luhmann's theoretical frameworks in empirical objects, Luhmann's semantic analysis was reformulated as an approach based on a middle-range theory, similar to that of Robert K. Merton, where the potential of the theory can be maximized for empirical research. This paper embodies this proposal, citing several developments within organizations that imbued insurance technology with various ideas and values.

The theory of the functional differentiation of society can be reconstructed as a working hypothesis from a methodological perspective, instead of a general theory that explains every part of society. Applying this to empirical social practices leads to progress in historical studies conducting the semantic variations connected to the institutional formation and their boundary works.

This paper provides a practical research perspective for historical studies in the social sciences, employing a reinterpretation of sociological theory that may be understood only as a structural presupposition of modern society. Furthermore, the increased possibility of historical-comparative studies on modern insurance is indicated by illustrating the applicability of this framework to a detailed case study of modern insurance.

Studies of Depression-era financial remediation have generally focused on federal deposit insurance and the provision of equity to banks by the Reconstruction Finance Corporation (RFC). This paper broadens the concept of financial remediation to include other programs – RFC lending, federal guarantees of farm and home mortgages, and the elimination of interest on demand deposits – and other intermediaries – savings and loans, mutual savings banks, and life insurance companies. The benefits of remediation or the amounts potentially at risk to the government in these programs are calculated annually and allocated to the various intermediaries. The slow remediation of real estate loans (two-thirds of these intermediaries' loans) needs further study with respect to the slow economic recovery. The paper compares Depression-era remediation with efforts during the 2008–2009 crisis. Today's remediation contrasts with the 1930s in its speed, magnitude relative to GDP or private sector nonfinancial debt, the share of remediation going to nonbanks, and emphasis on securities markets.

The institution of insurance in one form or the other is as old as man himself. The first type of insurance was of the nature of sharing risk of life in agroup and this form of insurance is surmised to have appeared sometime between the age of savagery and barbarism. In the Arabic peninsula, which in much later years was to become the seat of Islam, insurance in its earliest form was looked upon as pay‐ment of blood money by a group to lighten the loss of a member of the group. This was a form of mutuality in pre‐Islamic tribal Arabia.

Analyzes one of the three options of insurance against workplace accidents that Spanish companies can choose from: work accident and occupational disease mutual insurance companies. Although the taking out of insurance cover is obligatory, the choice is totally voluntary. The fact that these entities manage 90 per cent of premiums destined towards workplace accident cover collected by the Department of Social Security, allows us to assume that user satisfaction must be, consequently, quite high. In order to explore this, a study was made of the incentives that the combination of competition, regulation and ownership generated in these entities, and a postal survey of 443 companies affiliated to mutuals was carried out. Our results confirm the high rate of user satisfaction, although they also reveal some of the limitations associated with managed competition.