Mutual insurance

A new insurance product

Unfortunately we need insurance, sometimes due to legislation and other times as a necessity. There are numerous types of insurance from buildings insurance, contents cover, car insurance, mobile phone insurance, health insurance and life insurance to name some of the more common types.

Even more unfortunately insurance can be expensive especially if you've had a previous claim or if you have a special conditions or situations. Aggregated together insurance can add up to the hundreds or even thousands of pounds per year.

As an example my insurance premium costs for this year are as follows:
Buildings and contents insurance -£360
Health insurance - £440
Total insurance for the year works out at £1280. I'm sure there will be many readers who pay far in excess of this.

Whilst there's plenty already on the internet about how to reduce your insurance premiums - mainly advising price comparison websites there isn't an awful lot of information at this current time on mutual insurance. The reason being that there aren't many companies offering mutual insurance at the moment. However this is likely to change over the near future.

Mutual insurance explained

The idea behind mutual insurance is really neat. It works a little bit like a credit union where people band together to offer loans to others within a community. Similarly in the case of mutual insurance individuals group together as a collective and seek insurance together.

Each individual within the group within the group is responsible for the others. If one of the members of the group defaults then the others will all contribute to cover part of the loss. In addition the group will all receive increased premiums. 

The idea is to encourage more cautious and sensible behaviour. If you knew that your mum or your friend (or whoever was in your insurance group) would be on the hook for your bad driving or your careless behaviour then you might act more carefully for the mutual benefit of all.

I think the concept is a great idea and I'm likely going to look into it in a little more detail next time my insurance is up for renewal.

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