Not-for-profit Insurance companies?

July 19, 2007 11:57 AM

Insurance Filter: So we have credit unions (non profit coop banks): Do we also have non-profit or coop insurance companies? Do such things exist?

I mean for Health insurance, Car insurance, Homeowners insurance, etc.
It seems to me that a non-profit insurance company would give much better service than the for-profit ones (such as the ones "Sicko" criticized). I have a credit union as my main banking institution, and I absolutely love it - great service, no fees, etc. Wondering if similar cooperative insurance companies exist; if they do, i would transfer all my insurance needs to one of those too.
A quick search on google didnt turn up much information. Does anyone belong to a coop style insurance corporation? If so whats your experience with it?

posted by jak68 to human relations (11 comments total)

It may not be quite what you're after, but: some large corporations maintain "captive" insurers that serve them alone.

One biased site is Captive Insurance Resources.
posted by aramaic at 12:04 PM on July 19, 2007

A "mutual" insurance company is probably the closest thing in concept, since it's owned by the policyholders. It's a very popular structure for insurers. Examples include massive companies such as Amica, Nationwide, and State Farm.
posted by smackfu at 12:11 PM on July 19, 2007

Actually, another better example is New Jersey Manufacturer's. They only write policies in NJ, but they have a lot of the credit union concepts: no commission for staff, pay dividends to members, have limited advertising, have restrictive membership.
posted by smackfu at 12:20 PM on July 19, 2007

USAA, while I'm not sure technically qualifies as a not-for-profit, is an "insurance exchange." Quoth Wikipedia:

One of the characteristics that allows USAA to operate differently than almost every other Fortune 500 company is that it is not a corporation. The parent company, United Services Automobile Association is an inter-insurance exchange, the establishment of which is provided for under the Texas Insurance Code [6]. This insurance exchange is made up of current and former military officers and NCOs who have taken out P&C policies with USAA; thus they simultaneously are insured by each other and, as a group, own USAA's assets. …
Since there are no shareholders, profits are retained for financial strength or returned to the members. Returns are accomplished through an account each member has called the Subscriber Savings Account, or SSA. Each year a portion of USAA's profit is retained as "unassigned", the rest is allocated to each member's SSA using a formula based on the amount of premium the member paid that year as well as the member's SSA balance.

Technically, only the actual military personnel who are members of USAA are part of the Insurance Exchange. "Associate members" (dependents, spouses, etc.) of military personnel, are insured through a more traditional Delaware Corporation, but in practice there's no difference to the member.

I don't know of any other companies like this, but I'm sure they exist. The "insurance exchange" model is actually something (I think) that insurance companies themselves get into in order to spread/share risk, it's not commonly used for direct insurance of end-customers.
posted by Kadin2048 at 12:44 PM on July 19, 2007

See also histories of Philadelphia Contributionship for the Insurance of Houses, as well as the Knights of Columbus, Independent Order of Odd Fellows, the Grand Order of Free Gardeners, the Ancient Mystical Order of Rosae Crucis, B'nai Brith, Freemasons, Kiwanis, Optimists International, Rotary International, Woodmen of the World... and other friendly societies.
posted by Pollomacho at 1:59 PM on July 19, 2007

The business model seems to work across a number of industries; see also REI (a member-owned outdoors store).
posted by thedevildancedlightly at 2:48 PM on July 19, 2007

In my country there were quite a few mutual insurance companies, but many of them have demutualised and moved to a limited liability company structure to enable them to raise capital more easily (don't ask me why a well-run insurance company should need large amounts of outside capital but that's another issue).

An extant example of exactly what you're talking about is my medical insurer, Southern Cross, which is what we call a Friendly Society - organised almost exactly on the same lines as a credit union. There used to be a lot of these, eg Manchester Unity, Oddfellows, the Hibernian Society, and so on, all organised many years ago when working class people weren't an attractive market for existing insurers.

A long term problem for mutual and co-op style organisations is that inevitably they are organised around some sort of common bond, be it social, religious, whatever, and this is reflected in the founding documents that govern that organisation. (I'm deliberately using vague terms here because no doubt my legal lingo isn't the same as yours).

Over time people's allegiances wax or wane and organisations can end up without a sustainable membership base, and constitutionally unable to accept members from a wider group. I think this is why many of them have faded away, merged, or moved to other corporate structures. Likewise, without a mobilised, conscious group (farmers, industrial workers, religious sects) it can be hard to get them off the ground. Perhaps in today's more fragmented society this explains why new ones aren't forming.
posted by i_am_joe's_spleen at 3:00 PM on July 19, 2007

There's one in Canada, The Co-operators, which probably doesn't help you much. But they are a co-op. There's a section on their website about the co-op advantage and why they are a co-op. They are also one of Canada's Top 50 employers and I think they might be the largest (or at least one of the largest) insurance companies in Canada.

The Co-operators
posted by Cyrie at 3:43 PM on July 19, 2007

IIRC, Group Health Cooperative in the Northwest is a co-op health insurance. They are pretty big now, but started out tiny. I've been with them off and on for 7 or 8 years, and my experience has been mixed. It seems to depend a lot on the location of clinic. And some things are still the usual HMO BS.
posted by epersonae at 4:30 PM on July 19, 2007

My credit union offers many kinds of insurance (but it wouldn't surprise me if it was doing this in conjunction with a larger for-profit insurance company)
posted by -harlequin- at 9:38 PM on July 19, 2007

thanks for the tips everyone
posted by jak68 at 10:22 AM on July 21, 2007