Richard CanfieldPodcast Host and IBC Advisor, Ascendant Financial · Authorized Infinite Banking Practitioner | Author of 4 Books

Policyholder vs Shareholder Focus

26 Jul 2024 · 1 min

Watch on YouTube

0:42

A short excerpt from a YouTube video by Richard Canfield contrasting organizations whose boards are elected by policyholders (mutual organizations) versus shareholders. The speaker explains that policyholder-elected boards prioritize maximizing policyholder outcomes because mutuals have a single surplus account owned by participating ('PAR') policyholders, whereas shareholder-elected boards create incentives to maximize shareholder profit, leading to different structures and behaviors.

Chapters

Our board of directors is elected by our policyholders, a shareholders organization. Their board of directors is elected by the shareholders. They create incentives to maximize shareholder profit. Our board is elected to maximize policyholder outcomes. And this is where you start to differ in both the structure and the behavior. And you could say chicken and egg, which comes first. But at the end of the day, you end up with different incentives and different behaviors because there's only a single surplus account in the mutual organ organization, which is owned by our PAR policyholders. And so we're trying to maximize value for the participating policyholders only by virtue of only having policyholder owned accounts.