Mutual Insurers at an Inflection Point: AI and Partnerships Will Set the Pace
Mutual insurers are staring at a clear choice: modernize operations and scale smartly, or watch competitors pull ahead. Leaders across the sector see two practical levers that can change the trajectory-applied AI and strategic collaborations.
Neither is optional anymore. The carriers that move first on both will set pricing, control costs, and keep distribution sticky.
Why performance is splitting
Patrick Abbe, regional and mutual strategic growth leader at Aon, flagged a widening gap. Larger mutuals with diverse portfolios and broader geography are holding up better than smaller peers. The reasons aren't mysterious-limited geographic diversification, basic pricing capabilities, and dated core systems slow the rest down.
As Abbe put it, many are still on "very old, arcane systems that prevent change from happening quickly." That's a problem when competitors are turning up the pressure.
Litigation is warping the pricing signal
Neil Aldridge, president and CEO of NAMIC, said member priorities are clear: litigation reform and figuring out what AI actually means for underwriting, claims, and service. The legal environment is a cost driver that injects uncertainty into rates. That uncertainty hits small and mid-sized mutuals hardest.
If you're recalibrating rate need, add a scenario for worsening legal trends. It will save you painful surprises later. For context on policy efforts, see NAMIC's resources at namic.org.
AI: start small, win fast, then scale
"Everybody's talking about AI," said Patrick Markowski, SVP and COO at The Mutual Group. His advice: it's not too late to start, and the easiest wins are sitting in plain sight. Many carriers don't have in-house talent yet-rent what you need, run tight pilots, and focus on measurable outcomes.
- Claims intake and triage: route by severity and complexity, cut cycle time on FNOL and documentation.
- Fraud and subrogation: augment existing scoring with new signals from adjuster notes and unstructured files.
- Underwriting support: prefill, document summarization, and eligibility checks to speed small commercial and personal lines.
- Pricing ops: segmentation refresh, leakage detection, and rate-impact simulations; keep actuaries in the loop.
- Agent enablement: fast answers on appetite, forms, and endorsements; reduce back-and-forth.
- Back-office automation: OCR plus language models to process endorsements, bills, and loss runs.
Keep it simple: pick one use case, define success (time saved, loss ratio lift, or reduced leakage), run a 60-90 day pilot, and either scale or stop. If your team needs a fast upskilling path, practical programs are available at Complete AI Training.
Build vs. buy: talent and guardrails
You don't need a lab of PhDs to get moving. Co-source with vendors for pilots while you build internal capability. Put lightweight governance in place early: model ownership, validation, data privacy, audit trails, and human oversight for decisions that matter.
The carriers that win here treat AI like any other change program: clear KPIs, change management for adjusters and underwriters, and tight feedback loops.
Partnerships that create real scale
Strategic collaborations are gaining momentum. Markowski highlighted a simple play: white-label complementary products. If your book is strong in farmowners but thin in umbrella or inland marine, partner with a peer, white-label their product, and share revenue. Your agents get a fuller shelf, and you stay in the relationship.
Abbe also pointed to a shift in affiliations. It's no longer just strong carriers rescuing weaker ones. "We're starting to see instances where two strong companies are coming together" for diversification and economies of scale. That's a smarter path than overextending into unfamiliar lines alone.
- Product: white-label gaps, reciprocal distribution, and MGA tie-ups where it makes sense.
- Operations: shared services for claims, SIU, CAT response, and cloud/IT to lower unit costs.
- Capital and risk: joint purchasing for reinsurance and data; coordinate retention strategies before renewals.
- Data: pool loss experience (where permissible) to strengthen pricing and risk selection.
Consolidation is a feature, not a bug
AM Best reported a moderate decline in rated mutuals-from 276 rating units five years ago to 258 through December 31, 2024-as mergers, acquisitions, and affiliations picked up. A hardened reinsurance market, tighter terms and conditions, higher retentions, and nonrenewals of certain covers pushed many toward scale moves. Source: AM Best.
The scorecard: 2024-2025
Underwriting losses continued in the first half of 2025 due to California wildfires, but the $2.0B net underwriting loss was far better than the $9.2B loss in the first half of 2024. Mutuals posted $13.8B in net income in the first half of 2025, up from $9.4B in the first half of 2024.
For full-year 2024, mutuals delivered $26B in net income versus a $10.8B loss in 2023. The shift reflects improved rate adequacy across major lines. Discipline is working-stick with it.
Talent is the multiplier
Markowski was blunt: talent "always will be" the difference-maker. If you want independence and real execution speed, invest in people who can pair actuarial and underwriting judgment with data, automation, and vendor management. Incentivize cross-functional teams to ship and learn.
If you're building capability fast, curated upskilling by job function can help: AI courses by job.
A 90-day action plan
- Weeks 1-2: Map core systems and data sources. Pick two high-impact use cases (one in claims, one in pricing or underwriting). Define success metrics.
- Weeks 3-6: Run vendor-assisted pilots. Stand up light governance (model monitoring, privacy, approvals). Train frontline users.
- Weeks 7-10: Open partnership talks for a white-label product and a shared services opportunity. Align reinsurance strategy and retention targets.
- Weeks 11-13: Review pilot results, scale or stop. Present a board-level roadmap with ROI, risk controls, and a 12-month hiring plan.
The mutual model still has what customers want: durability and focus. As Aldridge noted, these companies are built for the long term and answer to policyholders, not quarterly calls. Modernize, partner where it helps, and keep your promise to be there when claims hit. That's the edge-and it's well within reach.
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