By Mia MacGregor
(The Insurer) – The mutual insurance sector is currently at a pivotal juncture, as it seeks to modernize its operations while adapting to a competitive landscape. Industry leaders are emphasizing that innovation in artificial intelligence (AI) and strategic partnerships will be crucial for future success.
Patrick Abbe, regional and mutual strategic growth leader for the U.S. at Aon, highlighted a noticeable performance gap within the sector. He noted that “larger mutual insurers with more diverse portfolios and geographies tend to perform better than smaller companies.” He attributed this disparity to factors such as “lack of geographic diversification, pricing sophistication, and outdated technology,” revealing that many companies still rely on “very old, arcane systems that prevent change from happening quickly.”
Abbe emphasized, “You’re at this interesting inflection point where, if you’re one of those companies that is a little behind the eight ball, you’re still trying to digest some really challenging stuff at a time when your competitors are ramping up competition.”
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Neil Aldridge, president and CEO of the National Association of Mutual Insurance Companies (NAMIC), pointed out that the top concerns for members include “litigation reform closely followed by trying to figure out what artificial intelligence means for our industry.” He explained that the litigation system poses a significant cost challenge, complicating risk pricing due to its unpredictability.
AI presents both substantial opportunities and a source of anxiety for industry players. Patrick Markowski, senior vice president and COO at The Mutual Group, noted, “Everybody’s talking about AI,” and while many companies may feel they are “behind the eight ball,” he reassured them that “it is not too late.” He pointed out that there is a wealth of experimentation happening in the field and highlighted the potential to leverage AI for quick wins within organizations.
Despite these opportunities, Markowski acknowledged that many companies remain in the early stages of engaging with AI. He remarked, “Oftentimes, companies are asking where do I start? They might not have the talent in their organization, and there are numerous providers out there that can assist.” He suggested that companies consider “renting resources and leveraging outside companies” to kick-start their AI initiatives.
The Rise of Strategic Collaborations
Strategic collaborations are emerging as a promising avenue for mutual insurers to enhance their product offerings and achieve greater economic scale. Markowski stated, “We think there could be an opportunity for mutuals to partner up and white label each other’s products.” He elaborated that many mutuals specialize in specific areas and recognize the need among their agents or customers for a broader range of products. “If one mutual has a product set that complements another’s product set, one can offer the other its product set, white label it, and work out revenue sharing arrangements,” explained Markowski.
This trend was echoed by Abbe, who noted shifting affiliation patterns in the industry. “We are seeing more mutual companies affiliating with one another to create diversification and economies of scale,” he said. Historically, such affiliations often involved a stronger company supporting a weaker one, but Abbe observed a new trend: “Now, we’re starting to see instances where two strong companies are coming together, recognizing their opportunity to be more formidable alongside those economies of scale.”
In a report released in September ahead of NAMIC’s annual meeting, AM Best noted a consolidation trend in the mutuals space. As of December 31, 2024, there were 258 rated mutual insurers, a decrease from 276 five years prior. This reduction is largely attributed to increased merger and acquisition activity as insurers navigate a challenging reinsurance environment.
AM Best stated, “Consolidation in the form of mergers, acquisitions, and affiliations was used as a strategy to strengthen themselves through these hurdles.” In the first half of 2025, mutuals reported underwriting losses due to California wildfires, with a net underwriting loss of $2 billion, an improvement from a $9.2 billion loss in the same period of 2024. However, the sector also recorded $13.8 billion in net income in the first half of 2025, up from $9.4 billion in 2024.
The Resilience of the Mutual Model
Despite the challenges, industry executives agree that talent remains a cornerstone of success in the mutual insurance landscape. Markowski stressed its importance, stating, “Talent is going to be very, very important. It always has been, and will continue to be a crucial aspect of maintaining independence and thriving in this space.”
Aldridge also emphasized the enduring strength of the mutual model, asserting, “Mutuals will continue to grow. The durability of the mutual model allows these companies to endure challenging times.” He concluded, “That’s what people want from their insurance company—they want reassurance that their insurer will be around when they need to make a claim.”
