Australia’s Business Council of Co-operatives and Mutuals (BCCM) has released the latest Discretionary Risk Mutuals Pulse Check report, which shows that membership and contributions continue to grow despite a more competitive insurance market.
Apex CEO Melina Morrison said the second annual report showed that 57% of mutuals delivered a surplus in FY25, with combined contributions increasing by 10% to AU$416m.
According to the report, surpluses are being retained, invested in risk management programmes for members, or returned to members by way of rebates or other mechanisms, with a notable shift this year towards building retained earnings and bolstering member balance sheets.
Morrison added that 93% of reporting mutuals experienced membership growth but noted that achieving sufficient scale remains a challenge for some emerging industry-based mutuals.
She said DRMs play an important role in the provision of risk management to communities and businesses.
The report, commissioned by the BCCM in conjunction with law firm Hamilton Locke, provides an ongoing snapshot of Australia’s discretionary risk mutual sector.
Unlike traditional insurance products, DRMs are owned by their members, who pool resources to fund their own coverage. They are usually set up by a group of organisations or individuals with a common purpose, risk profile and similar protection needs, where traditional sources of insurance are either unavailable or too costly.
In a DRM, members have a right to have their claim considered but, unlike insurance, do not have a contractual right to indemnity. Claims are considered at the discretion, usually of the DRM board or management, but there is no legal right to indemnity.
There are 150,000 Australian businesses, organisations and individuals using DRMs to manage their risk. The biggest DRMs include Capricorn Mutual, Unimutual, CivicRisk Mutual, Peninsula Mutual and Our Ark Mutual.
Among the biggest users of DRMs in Australia are small businesses, local governments, educational institutions, pilots, faith-based organisations and social care service providers, the report adds.
“In a softening insurance market with improved affordability across corporate property, professional lines and general liability for the first time in 21 years, discretionary mutuals continue to be an important solution for those who are underserved or unserved by the traditional insurance market,” said Charmian Holmes, Hamilton Locke’s head of funds and financial services.
But she warned of “headwinds in some emerging underserved sectors”.
“Last year’s theme of innovation continues for underserved segments,” she added, “for example, gig workers, such as rideshare, taxi, food delivery and courier drivers but it is not always clear sailing to form a viable mutual.
“There are some groups that may face challenges in terms of reaching the necessary scale for long-term growth and success.”
Read the latest Discretionary Risk Mutuals Pulse Check report here.
