Mutual stock insurance organizations operate on an advance premium basis and are generally capitalized on the lines of a stock corporation. The stockholders or shareholders enjoy a return on their investment represented by the capital stock. Some of these may issue assessable or non-assessable contracts (where they have a system of ‘calls' for premium post loss), but the assessment liability is typically limited. These mutual practices have in the past been designed to serve the requirements of a particular class of insured persons in the same trade or profession, frequently under the aegis of a trade or professional body. More recently hybrid mutual operations have emerged as a matter of necessity to replace insurance capacity vacated by commercial insurers after a buyers'market in the insurance trade cycle.

There are mutual insurance organizations that operate on an assessment basis. For the smaller mutual of this class, contributions may be sought from the policyholders, in most cases, after a loss has occurred. Frequently for the larger and more established mutual, sufficient funds and expertise will have been accumulated to make advance calls that will generally be sufficient to cater for all losses in that financial year. These mutuals are usually non-profit making, without share capital, and are used by insurers of a particular class, with or without the involvement of the trade or professional body concerned.

An example of this kind of mutual is the ‘Protection and Indemnity Club'. This largely owes its origin to the reluctance of London underwriters to associate themselves with the liability risks that emerged in shipping around the turn of the nineteenth century. The clubs, as they became known (The National Mutual Life with Profits Guide August 1993) also provided advice and services. Some have become involved in physical damage insurance to the hulls, others in war and strike risks. More recently, they have been used to solve professional liability problems.