A new report calls for governments and regulators to help facilitate the growth of discretionary risk mutuals.

The Business Council of Co-operatives and Mutuals report, produced with law firm Hamilton Locke, highlights “the important role” discretionary risk mutuals (DRMs) play providing alternative options “in markets where premiums have become unaffordable”. 

“This is an important benchmarking report that shines a light on a model of risk management that has stood the test of time across hundreds of years and yet is not well understood,” BCCM CEO Melina Morrison said. 

“With bushfire and cyclone seasons on the horizon, it is a timely reminder of the need for innovative solutions, including business model diversity, to ensure all Australians can manage their risk effectively and strengthen community resilience.

“While not a panacea, discretionary risk mutuals can provide diversity, but we need a policy environment that allows this important sector to flourish.”

The report, which provides “the first snapshot” of the sector in Australia, says 50,000 businesses, organisations and individuals are using DRMs, with combined contributions of $370 million to manage their risk. 

The largest DRMs include Capricorn Mutual, Unimutual, CivicRisk Mutual, Peninsula Mutual and Our Ark Mutual.

Insurance News earlier this year hosted a webinar with Picnic Labs and Our Ark to dispel some of the myths around mutuals. 

“The exit of some insurers and a reduced appetite to insure individuals and businesses for certain risks is driving the creation of new discretionary mutuals,” the report says.

“Innovative, flexible and tailored products can be offered to members where insurers are slower to innovate.”

Click here to read the full report.