A focus on profitability, statistics, technology and management succession were among the topics discussed at an industry meeting on ways for farm mutual insurers to succeed in a changing marketplace.
The dialogue took place at the National Association of Mutual Insurance Companies, during its Phoenix, Ariz. convention, which ended yesterday.
Led by Larry L. Forrester, president and chief executive officer of the Insurance Education Foundation in Indianapolis, Ind., the session addressed the question of whether farm mutuals can remain successful as the number of farms keeps declining.
Mr. Forrester said since their origins in the 1800s, farm mutuals face a changed marketplace where they are providing protection for a greater number of homes, huge farms using $200,000 pieces of equipment, and insureds with different expectations.
Among his suggestions was that farm mutuals, as they fill board member vacancies, seek replacements not on the basis of "who do we know," but rather "who do we need." He said they should also look for persons with skill sets that might best serve the company, such as an accountant or attorney.
Mutuals should look ahead and set succession plans for their chief executive officers so they have someone ready who understands the culture of their organization and their community, he said.
Such a plan reassures both employees and the community the operation serves, said Mr. Forrester. A proactive attitude to replace agents who are due to retire is also needed, he said.
Other key areas mutuals must work at improving, he noted, are agency development, technology applications and market strategies. He advised that companies should seek out employee talent that understands the new risk environment.
Mr. Forrester also called on members of the audience for comments. A South Dakota mutual insurer said the changing farm industry is creating some operations that are simply too big a risk for a mutual to take on. "Know how to say no," he advised.
A Montana insurer said her firm was dealing with the increasing urbanization by creating "rural lifestyle" policies for small acreage properties that were not really farms, but whose owners kept a few animals.
A Wisconsin mutual insurer said he had obtained statistical information that revealed they had far more farms in their vicinity than they realized. He said having a catastrophe model done had revealed not only where the mutual had its coverage concentrated, but also areas where it needed penetration.
Both agents and insurers said mutuals should use as a selling point their strength as a neighborly operation whose members know their community and provide great service.
An agent noted that when it comes to paying claims some big insurers may be faster, but the smaller farm mutuals are fairer.
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