New Cash Premium Plan 

 Automobile Insurance 



By A. E. Richardson, Manager, Illinois Agricultural Mutual 



Insurance Company 



A E RlrHARDSON 



rM^HI-: |<l;ii! ..I rtiiivcitiiij; :itl ;iu!i'iil<i- 

 I dill ami I nick iiipuraiui- polirics 

 ill the llliiiiiis Afrriiultmal Miitua! 

 li.-iiiamT Conipany ti> lh«' iifw "C'asli 

 I'vfniiiiiii J'laii" at the next prfiiiiuni 

 payiiiK ilati- after 

 April I. 1 '.•;!'> \va< 

 approved in its linal 

 form liy the Bcanl 

 (if Itireetors at it.- 

 last monthly meet 

 inir. This new plai; 

 heeonies operative 

 .just eijrht year^ 

 after :!,00(i Farm 

 Bureau Member-^ 

 m a (I e application 

 for automobile in- 

 surance on blanks 

 furnished by the l.A.A. and the County 

 Varni Bureau which was the beKJiiuinj; 

 i.f the Company. The Board of Diree- 

 t<iis of this Company, which Board of 

 I'irei'tors was at the besrinuinjr. always 

 has been and always will be the same 

 Board of Diiectors as the Board of Di- 

 rectors of the [.A. A. 



With no rates to po by an<l iii> ex- 

 perience but with full knowle<lpe of one 

 fundamental fact and that is, that nii 

 insurance company is sound unless the 

 policyholders jiay all the losses an<l ex- 

 penses of operation ami fully realizing 

 that if such a preferred proup of people 

 .IS Farm Bureau nu'Uibers bound them- 

 selves together and formed a company 

 of their own that no company operating 

 throujfhout the State c<iuld compete in 

 cost and that n(p company was poinjr ti' 

 furnish proti'ction such as was needed 

 at anything hut cost jilus such prt'fii 

 as the traffic would bear, there .teemed 

 to be a great opi>ortunity to really know 

 what insurance .should cost. p'ew. if 

 any. Farm Bureau people really knew 

 what they should i)ay for insurance 

 «Kainst loss or danuijre to their automo- 

 biles or damage which mijrht be d<ine by 

 their cars because few Farm Bureau peo- 

 ple had any opportunity to see the inside 

 Workings of a casualty company (.r the 

 actual cost as shown by the books of 

 any company. 



At the time this Company was organ- 

 ty.ed each applicant dejHisited with the 

 Company what was called a premium 

 d«»fH»it and made ^. o.ntribution t<. the 



sOiplus of tile ( i.ljil'iiM.V wblih \\:i> 

 known as the snrplii> sbaic aiul Ihert 

 was i.--siied to this jjroup <if early policy 

 h<d<lers what we call the ."surplus .^h:irc 

 Policy. 



The new Cash Premium I'lan whiili 

 bec<imes etl'ectiv<' as the pcdicies conn- 

 up for renewal on and after .\pril 1st 

 will provide a new p<dicy with many a<l 

 ditional features which you will fin<l 

 mentioned herein. It will furth«i pro 

 vi<le-that all the I'Xccss deposit and sur 

 plus share over an<l above the new ca'li 

 [•reniium re<iuired to carry the policy 

 forward for the next .six nnrnths will !•• 

 leturned to the policyholder in the form 

 of a check. This means that si-methini.' 

 like $;!2.'J,0(I0 of excess premium deposit 

 and surplus share will be mailed to 

 Farm Bureau people hidiliiiK' this type 

 of policy at their next renewal period 

 provided they pay their semi-annual as- 

 sessment which will be sent them thirty 

 days before it is due. 



Policy holders insured under the "'siu- 

 pliis fee" plan will pay the same rates 

 hereafter as others. They will not i<- 

 ceive any refund, however, since surjdus 

 fee policyholders have not deposited 

 any excess over the re>rular assessment. 



The new Cash Premium Plan further 

 provides there be a redistribution of the 

 cost of the insuranci' over the various 

 price list jrroups which schedule of rates 

 is gointr to be somewhat hijrher on cars 

 havinir factory list prices of less than 

 $"")(•. There will lie a very slight in- 

 crease in the cost of insurance on cars 

 rantriiijr between S7.")0 and Sl.ddd ami 

 practically all cars having a hiKher fa<-- 

 tory list price will have their rates re- 

 duced. This re-adjustment is ir line 

 with the loss experience of the ("oni 

 pany ilurinp- the past five years. .A 

 thorough analy.sis made by our .*^tatisti 

 cal I>epartment and actuary revealei: 

 that ineiiuities existed that shouhl In- 

 corrected, namely, that the low price 

 Kroup of cars was not payinj.' sutiicienl 

 premium to put them on a .self sup 

 portiUK basis. While the total premiuUi 

 income of the Company has been suffi- 

 cient at all tinies to pay all losses and 

 expenses and set up all the reserve 

 nee<ied and has created a surplus t<. the 

 Company every year since it begar. 

 operation, yet your Board uf llirectors 



Ir!' lUiit r .-.cll ^'lollfol i-itl-- -luubl sl;;l»l 

 oi, Its ow!i le|;-s. 



lien is h<iw it will operali . Kxamph 

 .liihii Brown has a full coverajre policj . 

 iriiludinv' stationary objeit collision, un 

 iler llie .Surplus .Shai( plan. Let's sup 

 pos, that he iMughl this car, which 

 i-ame un<ler $750, such as a Fiird or 

 'bevrolet. in IMO and insured it with 

 11.- for full coverajre as descrilxd above 

 TIh-i. leis suppose that his next a^ 

 -«-ssmenl date is April 2('. ]'X',t>. .lohii 

 Brown will be sent from this oflice a 

 ni;nlar notice of asse.-^sment such as lo- 

 has alway.s been ri-eeivine, which amouiit 

 wouhl be $<;.1S, which he will be asked fo 

 p;,>. When he pays this Sfi.lK his 

 premium di-posit and surj)lus share ot 

 ^ijs.oti will bi- intact. Then the «'.im 

 pany will write up one Of the new Cash 

 Premium Plan polici<s ami s»-nd it to 

 him. deiluctiiiK from his $28.0(1 the new 

 rate on his old car which new ral«' 

 woubl be $lt.:t.') less a dividemi of lO"", 

 or $1.(10 which would make a total net 

 deduction of $8.9.") which would be taken 

 out of th«' $28.(MI, thereby retumin;; 

 to .Ml. Brown the Com|"aii\-'s cheek for 

 *r.'.(i.".. 



There mipht be a slijrht delay ill Is- 

 siiintr these policii-s mi acoiunt of t.h«- 

 tremendous work involved. Your BoanI 

 of Ibrectors. however. h<die\e it is well 

 worth while to place in the hands of the 

 policyholders ;i new contract of in- 

 surance which is brou(::iit up to date 

 which will take care of many new nec»)s 

 that a farmer has for automobile in 

 surance. However, if the policyholder 

 pays the assessment which is sent to 

 him pr<imptly and by the time it is due 

 he will be fully proti-x-ted for the same 

 type of insurance he now has plus .the 

 new provisions in the Cash Premium 

 Plan policy. .\\l policyholders who have 

 been in the Company 2'i years will be 

 entitled to this divi<ten<l. This new 

 policy will have a guaranTe«-d rate and 

 will be non-assessable. The additional 

 advanta^res may be listed as follows: 

 < 1 ) Fire and Theft— All New Policies 

 will provide protiction against loss 

 fif all securely a*tached ei|uipmem 

 (excejit radio K^ 

 (2l Collision — .Any Pohc\ providinj; 

 protet-tion ajrainst damage by 

 Moving or Stationary Object Col- 

 lision will also protect insured 

 against aocid«-iital breakage of auv 

 plate glass. 

 i;!) Public Liability .All Policies pro 

 viding Public Liability protection 

 give any one the right to drive 

 automobile with owner's consent 

 unless prohibited b> law oi- at - 

 count of age. 

 1 4) Propertj Damage $.'..OtMi prute«-- 

 tion instead of $I.O(Mi for damage 

 to property of otherf. 

 t.'^i Temporarv Insuratin \eu Cash 



APRIL. 1 «.:{.-, 



