The National Association of Mutual Insurance Companies is the largest and most diverse national property/casualty insurance trade and political advocacy association in the United States.

“We are a full-service trade association for property casualty insurance companies,” says Paul Tetrault, NAMIC’s state affairs manager for the Northeast Region. “Our mission is to serve our member companies and one of our primary things is advocacy, working on legislation and regulation on both the state and federal level.”

NAMIC’s 1,400 member companies write all lines of property/casualty insurance business and include small, single-state, regional, and national carriers accounting for half of the automobile/ homeowners market and nearly a third of the business insurance market.

A Look Back

The National Association of Mutual Insurance Companies was founded in 1895 by a group of farmers in Iowa who first had formed their own mutual insurance companies for the purpose of creating better insurance coverage for their farms at lower prices.

“From there they decided a national association of mutual insurance companies would help promote and build the mutual model,” says Brent Bahler, vice president of public affairs for NAMIC. “The great-grandson of one of those founders still runs the farm mutual company in Iowa, and is active in the association established by his great-grandfather.”

Through the years, mutual insurance companies were formed to offer better coverage at lower costs to drivers, homeowners, professional groups such as doctors, jewelers, even lumbermen.

Mutual vs. Non-Mutual

There are several major differences between mutual insurance companies and non-mutual insurance companies, and it’s important that people understand mutual insurance and its benefits, the organization’s spokesmen say.

These include the fact that your premium dollars typically stay local, that as a mutual policyholder you can have a say in the affairs of your insurance company, that the cost of insurance provided by a mutual company is as competitive—if not more so—as insurance from a global stock insurance company, and that the level of personal service you get from a mutual insurance company is as good as it gets.

“First, in the technical sense, mutual companies are ‘owned’ by their policyholders, who have a vote in electing the company’s board of directors and therefore in the general conduct of the business,” Bahler says. “Non-mutual insurance companies, typically referred to as ‘stock companies,’ are owned by stock holders. Where that difference is most profound is in the commitment to the policyholder. Mutual companies serve the interests of their member-policyholders first and foremost, whereas stock companies first serve the interests of the shareholders, sometimes as the expense of the policyholders.”

There is no precise data on how many property/casualty insurance companies are mutual and how many are stockholder owned, but NAMIC’s 1,400 members serve more than 135 million member-policyholders.

“Our companies write 52 percent of all automobile insurance in the country, 43 percent of all homeowners insurance, and 30 percent of all commercial insurance,” Bahler says. “Altogether, that’s more than $177 billion worth of insurance.”

Local Issues

For those in the tri-state area, issues currently taking priority are modernizing antiquated statutes on the books and modernizing ratings. NAMIC also remains in favor of state-based insurance regulation being maintained.

“A perennial issue we work on is something called underwriting freedom, and one of the big sub-issues for that is the use of credit-based insurance scores,” Tetrault says. “It’s something that was once controversial, but it shouldn’t be because it’s been studied to death and found to be beneficial to consumers.”

Advocacy Issues

The day-to-day business of insurance is regulated at the state level, so much of NAMIC’s advocacy occurs in the state capitals.

“A few of the big issues we’ve taken on this year have included so-called ‘crash tax’ proposals, the use of credit-based insurance scores as one of many factors to determine a prospective policyholder’s potential risk,” Bahler says, “and the push for more effective building codes that can help mitigate the damage and deaths caused by natural disasters.”

The “crash tax” is a scheme proposed by some local governments caught in a budget squeeze to collect fees from insurance companies and their policyholders to pay for expenses incurred by police and fire department personnel who respond to automobile crashes.

“We oppose these accident response fees because they are a form of double taxation imposed on drivers who already pay for public safety services as part of their property taxes,” Bahler says. “Also, in most instances these fees are applied only to responsible drivers who have auto insurance. No municipalities have payment provisions for drivers who do not have insurance to pay for this service.”

NAMIC also opposes efforts to provide costly federal support for state-sponsored insurance programs, which encourage states to create risky catastrophe plans similar to the one in Florida.

“The continuing concentration of the country’s population in areas vulnerable to natural disasters poses significant challenges for policymakers, property owners, mortgage lenders, and insurers,” Bahler says. “We support a variety of legislative initiatives such as strong, statewide building codes and responsible land-use planning, to help greatly reduce the level of property damage and human suffering caused by natural disasters.”

Of the hot property-related insurance issues, the building code issue is probably the most important one facing property owners today.

The Louisiana State University Hurricane Center, for instance, estimated that of the $10 billion in wind damage to homes in Louisiana as a result of Hurricane Katrina, modern building codes would have spared 80 percent of the damage.

“Simply put, stronger, safer buildings for Americans and their families can save lives and reduce loss, thereby reducing the need for public disaster aid. We support congressional action to encourage the adoption and enforcement of a strong building code,” Bahler says. “NAMIC and the Building Code Coalition (BCC) support the creation of a separate financial incentive for states that have adopted and enforce statewide building codes. We think that legislation promising greater post-event aid for those states with strong building codes can serve as a powerful incentive to state governments.”

Future Challenges

Looking ahead, NAMIC understands that challenges await, as the insurance industry in general confronts consolidation, increased government scrutiny and an economy that is still trying to find its way out of a long recession.

“Insurers are in the risk management business, so it’s something we know well. So I’m confident that NAMIC and the companies we serve share a future that is sound and secure,” Bahler says. “It certainly helps that mutual insurance companies don’t have to decide between serving their member-policyholders or stockholders only interested in the near-term. We know whose side we’re on, and we know we have their support to make the right decisions.”

Keith Loria is a freelance writer and a frequent contributor to The New Jersey Cooperator and other publications.