Friendly Society

A friendly society (sometimes called a mutual society, benevolent society, fraternal organization or ROSCA) is a mutual association for the purposes of insurance, pensions, savings or cooperative banking. It is a mutual organization or benefit society composed of a body of people who join together for a common financial or social purpose. Before modern insurance, and the welfare state, friendly societies provided financial and social services to individuals, often according to their religious, political, or trade affiliations. These societies are still widespread in many parts of the developing world, where they are referred to as ROSCAs (rotating savings and credit associations), ASCAs (accumulating savings and credit associations), burial societies, chit funds, etc.

Before the development of large-scale government and employer health insurance and other financial services, friendly societies played an important part in many people's lives. Many of these societies still exist. In some countries, some of them developed into large mutually run financial institutions, typically insurance companies, and lost any social and ceremonial aspect they may have had; in others they continue to have a role based on solidarity and democracy without an objective to make profit. The current position of the mutual benefit society in Europe is well described in a report from 2012, commissioned by the European Commission. Healthcare mutuals worldwide are coming together in Association Internationale de la Mutualité, a Brussels-based association of healthcare mutuals.

Friendly societies in countries such as Great Britain were subject to prudential regulation to safeguard the financial interests of their members and secure the benefits promised to them, but the legislation (see for example Friendly Societies Act 1875) was separate from that applicable to insurance companies. In other countries friendly societies have no specific legal status, which makes that they have to comply to the same rules and regulations as for-profit insurance companies.

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