Crowdfunding Since 1883
There is an opinion among some that crowdfunding has the potential to disrupt the insurance industry; that younger people, disillusioned by the financial crisis and the belief that the financial game is rigged in someone else’s favor, will have more faith in the ability of their family, friends and community to help them financially. That a GoFundMe page that depends upon the kindness of strangers is a viable alternative to buying life insurance, health insurance, even car insurance. I find this argument both sad and ironic. Sad because our industry has done such a poor job of communicating the value of the good we do, that some of our potential future clients have instead turned to the internet for that help. Ironic because the very solution that they tout as revolutionary is not new at all and, in fact, has been the foundation of the insurance industry since its very beginning.
Contrary to popular belief, crowdfunding is not a new phenomenon. For centuries groups of people with common economic and social interests have pooled resources to develop new products, new processes or to support a cause. A great example is the Statue of Liberty. The money to build the pedestal on which it stands was raised through an appeal organized by a newspaper and the artist community in New York. In effect, the same huddled masses that she welcomes to America are those that gave her a place to stand. This is one example from the late 1800s; however, our bias toward the present leads us to believe that the idea began with websites like IndieGoGo, Kickstarter and GoFundMe.
The irony I reference above is another example of crowdsourcing from way back when. One of the earliest forms of crowdfunding is a mutual insurance company. If you think about it, at its core a mutual insurance company is crowdfunding at its most basic and most efficient. An individual with a need, in this case the need to provide for his family in the event something happens to him, contributes to a collective that pools the funds of people with similar concerns. When a member of the group dies, that member’s family receives the prescribed amount from the pool of funds. It doesn’t get much simpler than that. I would also argue that it doesn’t get much better, because rather than waiting and hoping for the kindness of strangers, a mutual insurance company guarantees the benefits that it will pay and guarantees that those benefits will grow over time for the member, who through his participation, also becomes an owner of the organization.
The title of this article draws upon this idea. Mutual Trust Life Insurance Company began as the Scandinavian Mutual Aid Association in 1883. A group of people gathered in a small Lutheran church in Galesburg, IL, because they had recognized the impact that the death of a parent and breadwinner could have on a family. They came together as a community to create something that would draw upon all of them to protect each of them. That spirit lives on today at Mutual Trust. As part of a mutual holding company that is owned by our policyholders, protecting our policyholders is our first priority.
A year ago in this space I spoke of the Dawn of a New Day at Mutual Trust. At that time we had just completed our merger with Pan-American Life Insurance Group and I spoke of the opportunities that lay ahead for our policyholders and our distribution partners as a result of that merger. We saw some of those opportunities come to fruition in 2016:
- A.M. Best upgraded our rating to A (Excellent) with a stable outlook and Fitch reaffirmed our A rating.
- We introduced Horizon Value, a participating whole life product with a substantially improved dividend scale, improved flexibility in our Paid-Up Additions riders and one of the best early guaranteed cash values in the industry.
- We maintained our dividend scale for in-force policies–no small feat in a challenging interest rate environment.
As we look ahead, we see more opportunity in 2017. As it has been for well over 100 years, our focus will continue to be on participating whole life, the guaranteed benefits and the guaranteed growth it provides to clients. We will continue to share the whole life story and the opportunities for growth that it offers for agents and agencies. Finally, we will continue to advocate for mutual insurance companies and the good that we do. Crowdfunding didn’t begin on a website. We have used crowdfunding to protect families and businesses since 1883. [LC]
Reference:
http://www.libertyellisfoundation.org/statue-history
