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Mutual Societies are insurance institutions whose activity is complementary to the public Social Security system.
They are non-profit partnerships with a democratic management structure that carry out voluntary insurance activity that is complementary to the public Social Security provision system. In some cases, the activity of mutual societies is alternative to the public system, in which case they become an interesting experience in management of an alternative to public provision.
In mutual societies, as a specific form of insurance institution, the figures of insured persons and member or policyholder are the same. That is, in mutual societies, the principle of identity or unity, which characterises participatory enterprises, is met. Moreover, the main activity is carried out exclusively with members. This form of democratic management, in which the insured person and the policyholder are one and the same, means that the premiums paid are fully allocated to guaranteeing the services for the collective insured, with a statutory (and not contractual) relationship in place.
Solidarity is another characteristic of this type of societies. In practice, this takes form in the principle of non-exclusion from the collective of those risks that cannot be covered by individual systems. This principle usually increases the cost of insurance. However, this is compensated by the absence of profit-seeking since any surplus is shared among members of the collective in a supportive manner.
Other characteristics of mutual societies are the following:
- Democratic participation of all policyholders in the governance bodies of the mutual society.
- Policyholders have equal rights and obligations, without prejudice to the premium paid for insurance or social provision services.
- Any surplus in economic content is allocated in one of two ways: increasing assets for the mutual society that will serve as guarantee to face commitments, and the sharing of profits among all the members of the mutual society.
- Competences are exclusively regional.
LEGISLATION
NATIONAL
- ROYAL DECREE 1430/2002 of 27 December which passes the Regulation of Mutual Societies for Social Provision
CATALONIA
- Law 10/2003 of 13 June on Mutual Societies for Social Provision in Catalonia
REGION OF VALENCIA
- Law 7/2000 of 29 May on Mutual Societies for Social Provision in the Region of Valencia
MADRID
- Law 9/2000 of 30 June on Mutual Societies for Social Provision in the Region of Madrid
BASQUE COUNTRY
- Law 5/2012 of 23 February on Voluntary Institutions for Social Provision
