Economia Social i Solidària

To celebrate the 125th anniversary of the Catalan Mutual Insurance Federation, we sat down with the organisation’s chairman, Jordi Busquet, who explained what makes the mutual insurance model different from other personal insurance models, the history of the Federation and the importance of cooperation with administrations and other SSE institutions.

How does the mutual insurance model work? What makes you different from other personal insurance options?

The main difference is the figure of the member: they are both the customer and owner at the same time. That is the main difference. When looking at other types of insurance companies, the contract signed is a contract between the customer, the policyholder, and the company. In contrast, with mutual insurance companies, when you sign the contract, you become a member and, therefore, part of the ownership structure. Regardless of the price of the policy, the amount of cover you have, your vote is worth the same.

Because, no matter how much people say that the customer comes first, what better than the customer and the owner coming first? In the commercial world, there is a lot of room for debating whether the customer or capital comes first. In our case, as part of mutual insurance, the aim is to provide a service, a benefit, first and foremost. And, therefore, under this structure, where you are the owner and customer at the same time, the service always comes first.

When you say service, what do you mean by that? What areas do you cover?

Depending on the mutual insurance company in question, they provide one service or another. There are mutual insurance companies that essentially offer health cover in areas where there is no cover or the cover is insufficient; others that offer accident coverage; others dedicated to medication; others offer burial cover…

The needs of the moment define the services provided by mutual insurance companies. It’s not so much that mutual insurance is made up of small companies that decide what to offer and to sign up members, rather it is about being a bottom-up process.

What added value does mutual insurance offer?

Looking beyond the classic values associated with the concept of social and solidarity economy (SSE), where priority is given to the person over capital and institutions are democratic, it is about continuity.

In other words, the guarantee of continuity when it comes to the institution, because it depends on the members themselves. We are highly solvent institutions. Why? Because we have accumulated reserves to make sure we last over time. We have extensive experience, we have seen various crises and we have overcome these crisis specifically because this is when people really appreciate the added value offered by continuity.

And not just the continuity of services, but how the service is provided, the soul of mutual insurance.

What impact did the Covid-19 crisis have?

It is at times of crisis when our model is really able to respond or not. Because when everything is going smoothly, all models work. But in times of crisis, that’s when you see which are capable of surviving. It’s not just a financial matter. It’s about the model itself.

As part of our model, as is the case of all insurance companies, Covid-19 is a pandemic and pandemics are not covered, by definition. So then what? These levels of solvency, how do we accumulate them? They are accumulated so that we can call on them when needed. Not to put them to a specific use.

In our case, all mutual insurance companies, have to bear the costs of Covid-19 without being covered. Now is not the time to skimp on the efforts dedicated to our services. We cannot reduce the quality of the service. Whether the storm, provide services that are not covered, but that people need and continue to maintain the level of quality, with whatever that entails.

What is the role of the Federation?

We always say that our concept is to be unique… People merely focus on the fact that we are small. But many small pieces make up something much bigger. We cooperate with one another to be able to compete, and the Federation is the instrument for achieving this. It allows us to compete in a market like the one we are seeing at present without losing our essence and without losing what makes each mutual insurance company unique.

How many companies form part of the Federation?

It is made up of 34 companies. Our criteria are that all companies must be based in Catalonia. Some only operate in Catalonia and others operate both in Catalonia and further afield.

We have a very high volume of members and insured parties. The member is the person who signs the contract, but may be made up of more than one person: more than one million people are covered by our companies, almost 1.3 million people. What’s more, our turnover rate, which is calculated by comparing the customers we lose each year compared to a normal insurance firm, is very low. That means that our members are happy. It might be more difficult to convince people of the model, but once they have joined, they find it hard to leave us.

What challenges do you think the Mutual Insurance Federation and the mutual insurance model face?

The first challenge, that we’ve all faced, and we all have to be aware of, is feasibility. People normally attack companies like ours, like others that are active in the social and solidarity economy, for financing issues: lack of efficiency, they are not well capitalised… In our case, they can’t say that about us, we turn the argument on its head. It’s us that can say that they lack solvency or are not well capitalised. Because they prefer to be less solvent, and have less capital, because they distribute it among their shareholders. Mutual insurance companies, on the other hand, prefer to retain it to respond in the event of any unexpected circumstances.

This footing is so strong, and it has taken us many years to accumulate and manage our funds, and we don’t use it to our advantage. In other words, we need to market our professionalism more and the way we do things, as this is our guarantee. Not many people are aware, that this is our main strength. I think it’s about communication. So, we need to really demonstrate just how unique we are. Conveying this uniqueness that we accept and aim to continue. We want to harness this diversity and get this message across.

I think that our major challenge is communicating how strong we are economically, at the same time, how unique we are and how, at the Foundation, we work to create master lines that make this model feasible in the long term.

How do you work and cooperate with the social and solidarity economy strategy?

Until very recently, we didn’t actively cooperate as a Federation or as a series of mutual insurance companies with the rest of the social and solidarity economy, either at a local level here in Barcelona or across Catalonia. Although it is true that many mutual insurance firms are linked to the social and solidarity economy strategy. It was an important opportunity for us.

However, just as the Federation needs to systematise solvency and economy matters, we had to systematise cooperation. The major milestone was the creation of the Catalan Social Economy Association (AESCAT), of which we were founding members, and this represented a major step forwards. I mustn’t forget to mention the reason we got involved in the social and solidarity economy strategy, and that was thanks to the Commissioner at Barcelona City Council at the time, Jordi Via. That was when we started to move forward and make contact with the social and solidarity economy strategy.

The motto celebrating the Federation’s 125th anniversary is “125 years of mutual support”. Why this motto?

The concept of mutual support is key to our model, mutual help that is intergenerational. Mutual insurance companies really support one another and the Federation to make progress with shared projects. There are people who have more resources than others, for example, legally, it can make much more progress in terms of solvency than other companies, as we pooled everything and made sure everybody could make the most of it and create a model for the Federation.

This mutual support is also offered by the companies themselves to their members, because if somebody has the misfortune of being diagnosed with cancer, what should we do? Put their premiums up because the costs go up? No. That is also a really strong message in my opinion.

And what I was saying about the intergenerational approach. Mutual insurance dates back to before the creation of the Federation, more than 150 years. Reserves have been accumulated, using the surplus left over from each year. They have accumulated and accumulated over time, and these have been made available to our members. It is a really small company, close to La Jonquera, a town called Cantallops. The Casino in the town belongs to the mutual insurance company; the first bar, l’Aliança too. This has all been made available to members, which ultimately, was the town. And they keep going. How is it possible to currently maintain an institution like this or others? Because if this commitment had not been passed down through so many generations, this situation would be impossible.

I always bring it back to the financial part. Why are we so solvent? So many years of management using a single criterion: continuity.