Mutual insurance is one of the protective forms based on an agreement regarding compensation for accidental losses. It is being implemented through a special fund consisting of contributions. Insurers organize a society in which they are responsible for performing various operations.
Product creation
Mutual insurance is a popular method for forming related products. For its characteristics, we can distinguish some features of the process:
- pooling finance by key players;
- the formation of a fund acting as a joint association;
- not a single member of the organization can dispose of its funds alone;
- members are entitled to administer;
- they are liable for obligations.
Mutual insurance involves the pooling of resources with those who have the same intentions regarding the realization of their own interests of a property nature. Such an organization carries out its activities by agreement and at its own expense.
The ownership right from one participant passes into a joint one. Thus, each policyholder can participate in the formation of products. In the form under consideration, 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 a certain relationship develops between the insured and the insurer.
The use of the fund is carried out through joint decisions at the general meeting. The main responsibility lies with the insurer - the organization. But in some cases, if the fund’s funds are insufficient to fulfill the obligations, the members of the fund bear subsidiary responsibility for its implementation.
In Russia, the organizational form under consideration is non-profit. 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. Indeed, the formation of a product is implemented by a whole society, where the right to use appears when agreements are reached in advance. Such rules are possible only for mutual insurance companies dealing directly with their participants. An example of an organization is such an institution as property insurance.
Features of the industry at the beginning of its development
Consider some features of this type.
- The right to an insurance product does not have a basis in the form of a contribution, since it is created only after the loss.
- There is no special organization dedicated only to its education.
- The product was created jointly.
- All members who are members of a society are responsible for its education.
- The layout takes place only after the insured event occurs.
With pre-education fund
In order to achieve stability and reliability, policyholders began to form a fund in advance. Thus, to a greater extent guaranteed return on loss. The system proved to be more perfect than in the case of the layout. Then there was a need for an organization specializing in 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 reference
This type of insurance is not new at all. He was known in ancient times. This insurance was allocated in several stages:
- distribution of losses to one or several persons;
- the emergence of insurance companies involved in this as the main activity;
- active participation of the state.
Implementation at all stages
As mentioned above, at first there were no organizations involved in this activity, and the corresponding product appeared only after the occurrence of the insured event. But over time, specially created companies began to function, in which they had their own benefit.
The first insurance company appeared in America in 1735. Potential buyers came up with the idea, so the state did not participate in this at first. It only regulated this area. But then he became interested in this institution and economically.
What about today?
At the moment, this species is quite common. The number of organizations with us has especially increased in the last years of the existence of the Soviet Union. Today, an impressive part of companies is involved in property insurance in different countries.
- 50% of the Swedish market.
- 40% in Finland.
- 30% in the USA.
The clubs creating a mutual insurance society are well known.
In addition, organizations that insure property from fire and other dangers are known. To exchange information and make appropriate decisions on certain issues, they must be united 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 unofficially. But at present their activities are backed up at the legislative level.
In each of these periods, the state took an active position in introducing the institution to wide sections of society. At the same time, many societies appeared at the city and industry levels.
During the liquidation period, for obvious reasons, development stopped. This was present not only in the insurance field, but also in all economic sectors. Later, when reforms were carried out, the state abolished its monopoly on this type of activity. And in the latest new period, the law governing mutual insurance came into force. In Russia, activities are carried out by special societies.
Procedure
This type of insurance is implemented in the interests of all parties.
- A collective agreement is concluded.
- Only property interests are affected in the process.
- The created organization is obliged to pay when the corresponding event occurs.
Mutual Insurance Society
So, these companies do not have paid share capital. Making a profit is not their main activity. They can also form reserves and determine their size by various methods.
Thus, the organization of mutual insurance societies provides for the creation of commercial and non-profit associations. They can exist with or without a special contract. Organizations and individuals participate in them, both members of the organization and those who do not have this status.
Society Activities
Companies provide insurance, reinsurance, mutual insurance. They are engaged in brokers and actuaries. But first of all, insurers carry out this activity.
It is implemented on a voluntary basis, on the basis of the contract and the 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 liabilities, reserves are formed that can be used only when making appropriate payments. They cannot be withdrawn in favor of the budget of the federation or its subjects.
Previously, a mutual liability insurance company could carry out its activities without licensing. 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.
- Life insurance.
- Transport clubs.
- Industry pools.
Associations aimed at providing insurance to developers are also widespread in Russia.
Transport clubs
This species is most common. The most famous among them are marine mutual liability insurance clubs. Protection here seems preferable in view of the fact that:
- requires a special escort system and emergency commissioners;
- there are specific risks and a large expression of value with a small implementation;
- cost savings are achieved by taking into account the medium and long-term prospects.
The first club in this area was founded in 1855. Today, about 70 organizations in the world are known. The leader among them is the Bermuda Association of Shipowners of Great Britain and Northern Ireland. According to the rules of this organization, Ingosstrakh operates in Russia.
In all clubs, the annual insurance policy begins on February 20 from 12 noon. The basis for this is a special agreement. According to it, the insurance policy expires at the same time of the next calendar year.
Industry Pools
Another common area of the system is industry pools. Their specificity is as follows.
- Risks here, although unlikely, have disastrous consequences.
- They are unevenly distributed. In addition, there is no necessary data for underwriting. Therefore, sufficient coverage can only be realized in pool relationships.
The anti-terrorism insurance pool and the corresponding nuclear pool are known in Russia.
Among the negative aspects of this institution are the following.
- Contributions to insurance funds are indefinite.
- 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.
So, in Russia, a consumer society of mutual insurance can function. But in addition to activities, it should be distinguished from some specific forms. Mutual and dual insurance are sometimes confused. The latter means concluding an agreement on one occasion and at the same time in several companies at once. It is sold with incomplete insurance. Then one company receives a part of the payment. Another has the so-called insurance. Signs of this type are object identity. In addition, this is the case and term of insurance, as well as its availability at several companies at once.
It is noteworthy that this institution is prohibited in some countries. Then, upon the discovery of this fact, one of the contracts is recognized as invalid. However, in most countries the institution is permitted. This is due to the desire to increase insurance coverage. But the main principle here remains unchanged, wherever this species is applied. It consists in the fact that the total amount payable should not exceed the insured value. Also, it should not be higher than the loss resulting from the corresponding case.