Seven out of ten respondents do not feel able to give a satisfactory explanation of the differences between a mutual organisation and a public limited company.
Over half of those taking part in the research were familiar with the term ‘mutual’ in a business context. However, the results of the research highlight the widespread lack of understanding of the differences in structure and ownership between a mutual and a plc.
People in Scotland have the greatest understanding of the differences between the two types of organisation, but still with only 35 per cent feeling able to provide a satisfactory explanation of the differences. In the South East, just 29 per cent of respondents felt they understood enough to explain, followed by 28 per cent of people in Wales and the South West. The North West had the least understanding with just 25 per cent of the public feeling they had enough knowledge to explain the differences between the two types of organisations.
The research sampled 1013 adults from a representative profile of the UK population and the results revealed other correlations between education, age, social class and gender and the understanding of the mutual difference. Eight out of ten of those in C2 and DE socio-economic classes were not able to explain the differences in contrast to six out of ten in the AB classes. Those who stayed on in further education had a greater understanding and men were twice as likely than women to feel able to give a good explanation.
Rachel Griffiths, vice-president communications of the Association of Mutual Insurers, commented: “Our concern is that the policy holders and members are not sufficiently knowledgeable to make a balanced and informed judgement in the demutualisation debate.
“Other research we compiled shows that organisations which demutualise, pay out up to £14,000 (33 per cent less) on a 25 year with-profits policy than those which remain mutual, performing well below even the industry average.
“While the policy holder or member may be tempted by a short term payout, we feel it is vital that they understand the full, longer term implications on their policy of their insurer becoming a plc and the impact of the costs on their policy of going through that process."
