"Everywhere you look you see a very challenging year for the insurance industry," says Chamness.

However, mutual insurers are more than capable of meeting the challenge.

"In spite of all this, more than half-way through 2011, our members are strong," says Chamness. "They are sturdy businesses with a long-term focus that are built for enduring the worst kind of turmoil that is out there—and to be there to serve their policyholders over the long term."

Jim Kennedy, the incoming chairman of NAMIC and president and CEO of Bucyrus, Ohio-based Ohio Mutual Insurance Group, concurs. "This is a long-term business," notes Kennedy. "We don't get into our problems overnight; we don't get out of them overnight. The ability to make long-term decisions to deal with the issues we might be presented with is a good counter-balance to some of the more perceived advantages a stock company might have.

"From my perspective," he continues, "the marketplace conditions that we are in—the soft market, the difficult catastrophe environment, the low-investment environment and the need to focus on underwriting—those are 'equal opportunity' [challenges] whether you are a stock company or a mutual company.

"To me it comes back to the integrity of the organizations, the quality of the organizations and how they manage their way through those kinds of challenges," Kennedy adds.

"With their singular focus on the policyholder and their long-term view of business, the future of mutuals is quite bright, and I'm quite bullish about this group," he says.

Publicly traded companies face the quarterly pressure of answering to shareholders and financial analysts, Kennedy points out. This gives mutuals an advantage to focus on policyholders and "look at our industry a little wider."

Considering that insurers' investment returns have not been "as robust as they have been in the past," it has caused the carriers to refocus their attention on underwriting profit, which Kennedy believes "will only help all of us in the long run."

DIFFICULT ENVIRONMENT, BUT NOT MUCH DE-MUTUALIZATION

No matter how difficult the environment, Chamness says he does not believe there will be a lot of mutuals de-mutualizing. It is an expensive proposition, he says, and with the regulatory approvals involved, it is not a proposition many mutual companies warm to.

The more likely scenario is for mutual companies to form partnerships and affiliate with one another, pooling together resources and sharing systems and management. In these situations, the healthier partner will have a greater say over managing the two companies.

"There may be a slight uptick [in the number of partnerships]. There is usually just a handful in most years, and perhaps there will be a few more this year," says Chamness.

MUTUALS & TECHNOLOGY

Small to medium-sized mutuals are making choices about their technology investments to drive connectivity and meet the growing demands of a tech-savvy world. For them, the pressures are greater because the expense of investment makes it an "all or nothing proposition," Chamness says.

"There's not a second chance if they screw it up," he adds. "Having the people in place to make the right decisions will grow in importance."