Mutual insurance is a non-profit form of organizing an insurance fund

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Mutual insurance is one of the protective forms based on an agreement on compensation for accidental losses. It is implemented through a special fund consisting of contributions. Insurers organize a society in which they are responsible for the execution of various operations.

Product Creation

Mutual insurance is a popular method for the formation of related products. To characterize it, some features of the process can be distinguished:

• union of finance by the main participants;
• formation of a fund acting as a joint association;
• none of the members of the organization can manage its funds alone;
• members have the right to govern;
• they are liable for their obligations.

Mutual insurance involves the pooling of resources with those who have the same intentions regarding the implementation of their own interests of a property nature. This organization operates onagreements and at their own expense.

The right of ownership from one participant passes into a joint one. Thus, each policyholder can participate in the formation of products. In this form, the principle of reciprocity works, where the mutual right to the funds available in the fund is realized.

The peculiarity of this method is that a person can be both a buyer of a service and an owner of a fund created on the basis of an agreement. Then there are certain relations between the insured and the insurer.

The use of the fund is carried out through the adoption of joint decisions at the general meeting. The main responsibility lies with the insurer - the organization. But in some cases, if the funds of the fund are not enough to implement the obligations, the members of the fund bear subsidiary responsibility for its execution.

In Russia, the considered organizational form is non-commercial. Its main goal in carrying out activities is the formation of its own product.

Thus, it turns out that the method becomes the basis of activity for companies where various forms of mutual insurance are carried out. After all, the formation of a product is realized by the whole society, where the right to use appears upon agreements reached in advance. Such rules are possible only for mutual SCs dealing directly with their participants. An example of an organization is an institution such as developer insurance.

Features of the industry inthe beginning of its development

Let's consider some features of this species.

1. The en titlement to an insurance product does not have a premium basis, as it is created only after the loss occurs.
2. There is no special organization dedicated only to his education.
3. Product co-created.
4. All members who enter the society are responsible for its education.
5. The layout takes place only after the insured event occurs.

Pre-funded

In order to achieve stability and reliability, policyholders began to form a fund in advance. Thus, the return of funds in case of loss was more guaranteed. The system proved to be more perfect than in the case of the layout. Then there was a need for an organization dealing specifically with the formation of an insurance fund. It can be managed at a general meeting. And the right to own the fund is exercised in accordance with the agreements.

Historical background

This type of insurance is not new at all. It has been known since ancient times. This insurance was allocated in several stages:

• distribution of casu alties affecting one person or several;
• emergence of ICs doing this as their main activity;
• active state involvement.

Implementation at all stages

As mentioned above, at first there were no organizations involved in this activity, and the correspondingthe product appeared only after the occurrence of the insured event. But over time, specially created companies began to function, which had their own benefits.

The first insurance company originated in America in 1735. The idea arose from potential buyers, so the state did not participate in it at first. It only regulated this area. But then he became interested in this institute and economically.

What about today?

At the moment, this species is quite common. The number of organizations in our country increased especially in the last years of the existence of the Soviet Union. Today, an impressive number of companies participate in property insurance in different countries.

1. 50% of the Swedish market.
2. 40% in Finland.
3. 30% US.

Clubs creating a mutual insurance society are quite well-known.

In addition, there are organizations that insure property against fire and other dangers. In order to exchange information and make appropriate decisions on some issues, they must unite in unions operating both at the national and international levels.

Development in Russia

Mutual insurance in Russia developed gradually. This process can be divided into several periods. At first, this institution was just being formed. Then all organizations involved in this type of activity were liquidated. After that, they began to develop in an informal way. But at present, their activities are supported by legislativelevel.

In each of these periods, the state had an active position on the introduction of the institution into the general public. At the same time, many societies emerged at the city and sectoral levels.

During the liquidation period, development stopped for obvious reasons. This was present not only in the insurance field, but in all economic sectors. Later, when reforms were carried out, the state abolished its monopoly on this type of activity. And in the last modern period, a law regulating mutual insurance came into force. In Russia, activities are carried out by special societies.

Procedure order

This type of insurance is implemented in the interests of all parties.

1. A collective agreement is being signed.
2. Only property interests are affected in the process.
3. The created organization is obliged to make a payment when the relevant event occurs.

Mutual Insurance Society

So, these companies do not have paid-in authorized capital. Profit making is not their main activity. They can also form reserves and determine their size by various methods.

Thus, the organization of mutual insurance companies provides for the creation of commercial and non-commercial associations. They may exist with or without a special agreement. Organizations and individuals, both members of the organization and those who do not have this status, take part in them.

Activitysociety

Companies carry out insurance, reinsurance, mutual insurance. They are handled by brokers and actuaries. But first of all, insurers carry out this activity.

It is implemented on a voluntary basis, on the basis of an agreement and rules, where the conditions are determined. The latter are approved by the association of insurers, contain provisions on subjects and objects, the occurrence of cases, risks, tariffs, premiums, and so on.

To ensure insurance obligations, reserves are formed, which can be used only when the relevant payments are made. They cannot be withdrawn in favor of the budget of the federation or its subjects.

Earlier, a civil liability mutual insurance company could operate without a license. However, since mid-2007, after the adoption of the relevant law, organizations are required to obtain licenses.

The main activities in this direction are as follows.

1. Life insurance.
2. Transport clubs.
3. Industry pools.

In Russia, there are also common associations aimed at insuring developers.

Transport clubs

This species is the most common. The most famous among them are the clubs of maritime mutual liability insurance. Protection here seems to be preferable due to the fact that:

• requires a special escort system and emergency commissioners;
• availablespecific risks and a large expression of value in a small implementation;
• cost savings are achieved when taking into account the medium and long term.

The first club of this direction was founded in 1855. Today there are about 70 organizations in the world. The leader among them is the Bermuda Association of Shipowners of Great Britain and Northern Ireland. In Russia, Ingosstrakh works according to the rules of this organization.

In all clubs, the annual insurance policy begins to operate on February 20 from 12 o'clock. This is based on a special agreement. According to him, the insurance policy expires at the same time of the next calendar year.

Industry pools

Another common direction of the system is industry pools. Their specificity is as follows.

1. The risks here, though unlikely, have disastrous consequences.
2. They are unevenly distributed. In addition, there is no required data for underwriting. Therefore, sufficient coverage can only be realized in pooling relationships.

In Russia, the anti-terrorist insurance pool and the corresponding nuclear one are known.

Among the negative aspects of this institution, the following stand out.

1. Contributions to insurance funds are indefinite.
2. The portfolio is highly specialized, which is why risks accumulate.

Double insurance

In addition to the above species,the direction in question may have other directions.

Thus, a consumer mutual insurance society can function in Russia. But in addition to activities, it should be distinguished from some specific forms. Mutual and double insurance are sometimes confused. The latter means concluding a contract on one occasion and at the same time in several companies at once. It is implemented with incomplete insurance. Then one company receives a part of the payment. At the other, the so-called additional insurance is carried out. The features of this type are object identity. In addition, this is the case and term of insurance, as well as its availability from several companies at once.

It is noteworthy that this institution is banned in some countries. Then, upon discovery of this fact, one of the contracts is declared invalid. However, in most countries the institute is allowed. This is due to the desire to increase insurance coverage. But the main principle here remains unchanged, wherever this type is applied. It lies in the fact that the total amount payable must not exceed the insurance value. Also, it should not be higher than the loss resulting from the relevant event.