For some time now, ICMIF has been promoting member engagement as one of the key competencies necessary for running a successful cooperative and mutual business. But it is clear that certain membership models make it easier to engage than others. So what challenges do the various models present and what are ICMIF members doing to address them?
It is pleasing to see that The Ownership Commission Report (recently published in the UK) is promoting the virtues of member engagement. The report will be used as a public policy document to encourage wider use of the employee ownership model particularly to deliver public services.
Mutualisation of business is seen as being key to bringing diversity in any country and this report, sponsored by CEO of The Co-operative Group (UK), Peter Marks, is great profile-raising for our sector.
In our last three ICMIF conferences we have highlighted the importance of member engagement. At our last conference we heard case examples of this from The Co-operators, NFU Mutual, Engage Mutual and Sancor and I discussed the MDA National, Australia example in a previous blog. When we asked delegates at our 2011 conference if they were committing enough resources to engagement with their members, only 50% said they did. Yet more than 95% of delegates said it was key to building a successful business.
The answer to the dichotomy may lie in the diverse forms of member-ownership models that ICMIF members have. In its purest form, a mutual or cooperative is where ALL customers are members and share in the success of the business; examples I have mentioned in previous blogs would be PPS (South Africa), Capricorn (Australia), NFU Mutual (UK) and most of the French mutuals.
We also have members that have, over the years, grown through acquisition but find it difficult to give membership rights to these customers due to legal and technical constraints. Whilst this situation is tricky, it can be done. For example when The Co-operative Bank acquired the mutual building society, Britannia, their members were given ownership rights in The Co-operative Group. However, this was only made possible due to legislative change in the form of the Butterfill Bill.
We then have members that assign ownership rights to specific product types, which by their very nature, share in the risk and rewards of the business. There are many examples of these in different countries and while this works well in most situations, sometimes it doesn’t. In the UK for example the regulator believes that all life mutuals are owned by the with-profits product policyholders only. A problem that could seriously impair most UK life mutuals if the regulator gets their way; which is unlikely in my opinion.
The most extreme case that I am aware of is, The Economical in Canada. With only 1,000 members and more than one million customers this doesn’t look or feel like the values-led businesses that we know and applaud. This structure has lead to The Economical’s recent decision to demutualise, a verdict that many believe was driven by the greed of the select few owners who mainly come from – surprise, surprise – the executive team.
Some ICMIF members also derive most of their business from the broker community. This group like to keep their client relationships very close, for understandable reasons, but this makes member engagement challenging. So, convincing brokers that members will benefit from, and welcome direct engagement from their mutual or cooperative product provider, is for many unchartered territory. Is your organisation tackling this issue? Please let us know.
Even models where the customer doesn’t directly own the organisation, such as in most cooperative insurance organisations, the customer is still at the heart of all decision making and engagement is just as vital. I was recently with Russell Gill who is in charge of membership at The Co-operative Group. They have seven million members but 12 million customers. Customers of the Banking and Insurance arms of the organisation have no direct membership rights and Russell is now challenged to find ways to grow membership to 10 million and he sees the financial services part of the business as the natural place for growth in membership. This is a challenge he is rising to and I will keep you informed about how he tackles this. If any of our members have similar experiences it would be great to share them in the comments section of this blog.
So ownership among ICMIF members is very diverse for many different reasons. There is no RIGHT or BEST form of ownership for cooperative and mutual insurers; it’s what works for your organisation and your members/customers.
The fact is that we all know better member engagement leads to member advocacy which in turn leads to better businesses on so many levels. So we must continue, no matter how challenging the task, to engage with our members. I also would add that democracy in a mutual or cooperative is important but is a subset of member engagement. ‘Democracy’ can be a topic for another blog.
We will be shortly launching an ICMIF Leaders Forum on Legal and Governance issues. It is hot topics like these that we, as ICMIF members, need to debate so we can raise the standards in member engagement.
And finally, ICMIF member engagement is as crucial to the Federation’s success, as your engagement with your own members is to your success. I continue to be delighted and humbled by the many comments that ICMIF members have posted since I started this blog. I hope that you will continue to be part of our debates and take inspiration from your colleagues from around the world. Thanks.