Mutual Insurance Companies Offer the Best Value
Car insurance is tricky. The price of your policy can fluctuate for seemingly random reasons , and the details of the policy itself can be confusing as well. To complicate matters, there are two types of insurance companies: public and mutual. According to ValChoice, mutual companies offer customers the best value.
According to the New York Times, publicly traded companies make up 48.3% of the market, and these are companies like Progressive and Allstate. They serve shareholders as well as their policyholders. On the other hand, mutual companies are owned only by policyholders. USAA, Southern California Auto Company, and Liberty Mutual are all examples of mutual insurance companies. Some mutual companies pay dividends to policyholders; others don’t.
According to the Times, analyst firm ValChoice recently released its Market Report, a study that analyzes claims over the past five years for more than 300 auto insurance companies, comparing premiums to claims paid. They found that mutual companies offer the best value, especially mutual companies that pay dividends.
It found that the auto insurers providing the most value to consumers are the mutual insurance companies owned by their policyholders and paying them dividends. Over the five-year period from 2011 to 2015, these companies paid an average of 72.6 percent of their claims premiums; public insurance companies with shareholders to meet 62.8% of claims paid out.
Dan Carr, the former CTO who founded ValChoice, said it was difficult to understand exactly why such inequalities exist….
“This is where a conflict arises between shareholders and policyholders,” said Mr. Carr. “We show how companies have done their business, and this is not always in the best interest of the policyholder.”
Several mutual dividend paying companies include USAA, Automobile Club of Southern California, and Amica Mutual. To view the full report, follow the links below.
Market overview | ValChoice via The New York Times
Photo by:Negative Space