Why Mutuals are better

In a recent speech, Bill Gaywood, chief executive of Liverpool-based healthcash insurance provider Medicash, highlighted why he believes there is an important role for the mutuals and other companies which survive without shareholders

" There is a long roll call of major high street names with one thing in common. The Halifax, Abbey National, the Woolwich and Cheltenham & Gloucester - all are former mutuals that lost their independence and their mutuality over the last 15 years, and ended up as part of larger, shareholder-owned groups. Building societies like the Alliance & Leicester which have remained independent but have decided to get rid of mutuality, believing the shareholder model to be more attractive.

With all these big names taking the demutualisation road, we at Medicash are often asked why we choose to remain independent, and mutual, without shareholders to answer to.

We see our version of mutuality as a real benefit to our customers and our staff, and a model which will work for us for the foreseeable future.

Not having shareholders does not mean we are unprofessional. We at Medicash run our business like any public limited company. We turn over £28m annually, and have achievable plans to boost that to £45m by 2010. We made £2m in the last financial year, and have a positive balance sheet of £24m.

We run an efficient operation, paying 1,000 claims every day to members all over the country, with a five-day payout target.

And that is probably the crucial area where non-shareholder organisations can score, by truly putting the customer first.

Instead of having to put shareholder value at the top of the agenda, we can put our customers at the top of ours. As we don't have to pay dividends, we can reinvest our surpluses in finding out what products and benefits our customers want and developing new products for them. We can invest in state of the art systems and service, and in meeting the stringent demands of our regulator, the FSA.

We can also choose to direct money to charity, something which Medicash and many other mutuals have done for many years. By our calculations, we have given the equivalent of £77.4m to health related charities and the NHS since we were founded in 1871. Would this have happened had we been a shareholder-led company?

Medicash has to ensure we outperform the demutualised competition, otherwise, their customers will go elsewhere. We have had to become ultra-professional, without losing the customer and charity focus which distinguishes us.

Sometimes, standing out from the crowd can be a practical sign that you are doing something right."

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