To be competitive, mutuals have to meet the consumer's demand for the right coverage at the right price, and the majority of our members usually answer this through the independent agent channel. These agent-partners appreciate the consistent market and long-term relationship that mutuals offer.

Mutual property & casualty insurance in the U.S. goes back to the mid-1700s—the first successful mutual insurance company was founded by Benjamin Franklin in Philadelphia—and the median age of a mutual today is 120 years.

I think there are two things that make that possible.

First, since there are no shareholders, mutuals don't have the pressure to meet short-term profit expectations. As a result, mutuals can manage their businesses with long-term perspectives that don't require as much risk.

Second, because mutual policyholders are “members” of their mutual, the relationship between the company and the policyholder is stronger. Policyholders are able to have a voice in the direction of their company through the election of their board of directors. Also, the vast majority of mutual boards consist exclusively of mutual company policyholders.

Small mutual insurance companies have a third advantage, which is being a local business. And policyholders are likely to see the folks who work at the mutual in their neighborhood, on their Main Street. And they're likely to be on a first-name basis with them.

Q: Do you feel that Washington's tendency to be reactive rather than proactive regarding issues affecting insurers has impacted mutual insurers in particular? And if you could set things right on that front, how would you?

It's not reactive or proactive as much as aware or unaware. As the financial crisis was happening, we successfully educated Congress and other policymakers about the property & casualty insurance industry's role in providing stability for our financial system and our economy, even within a systemic failure. A recent report by the Government Accountability Office examined the impact of the financial crisis on insurance markets and how our industry and regulators responded. The GAO found that our industry weathered the storm and provided much-needed protection for policyholders amidst the economic chaos. In fact, the GAO was clear in reporting that the insurance industry's business practices shielded companies and policyholders from the financial meltdown.

The mutual property & casualty insurance industry is responsible solely to its policyholders. We focus on minimizing the risks they face, including by minimizing the risk to the company. Mutual insurance companies didn't then and don't now deal in the high-risk, highly leveraged transactions that caused the crisis, and they are required by law, regulation, and good sense to maintain a reserve for paying claims. Like every other player in the financial system, our industry was not unaffected—particularly on the investment side and with reduced business opportunities in a contracting economy—but as the GAO noted, we recovered quickly and made sure that at no point was there a risk of a legitimate claim going unpaid.

We want—and need—legislators and regulators to develop a better understanding of and appreciation for the differences that exist between the insurance industry and other financial services firms, as well as the differences between mutual insurers and stock insurers.

Q: In which markets have mutuals been particularly skilled at leveraging their agility in writing new business?

Niche markets have offered robust innovation and growth. At the same time we see large mutuals very effectively leveraging efficiencies their size creates and mutuals of all sizes and lines of business using their connectedness to customers to their advantage.

In the past few years we have also seen new mutual companies born, like Build America Mutual Assurance Company, which opened its doors for business in July 2012. While it's the newest mutual insurance company in the United States, BAM is also the first mutual insurer of municipal bonds.

Privilege Underwriters Reciprocal Exchange, based in New York, was founded in 2006. As a reciprocal, PURE is operated for the benefit of high net worth, responsible policyholders in more than 40 states and the District of Columbia who want comprehensive, customized insurance coverage.

These companies and others had a choice to form as stock companies or mutuals. They chose mutual because it works.