AUTO INSURANCE STAFF AND EK/IPLOYEES* 



Ten Years of Hustlin' 



Farm Bureau Auto Insurance Company 

 Celebrates a Birthday 



V ^^A( K m the late months of 1926 

 ^^/\ lann Bureau members all over 



/ J tiie state received notices from 



the lAA that if they desired to start a 

 mutual auto insurance company they 

 should send in an application for mem- 

 bership with a S-5 check attached. When 

 and if such a company could be formed, 

 they were told, they would be charter 

 members and their car. regardless of aye 

 or make, would be insured auainst any 

 kind of i)aniat;e. fire or theft. 



Unless a thousand applications and 

 checks were received m a reasonable 

 length of time, the notices said, all checks 

 would be returned to the senders and the 

 plans for an auto insurance company 

 would be siielved. 



The plan was not shelved and by 

 April 1st, 1927, almost .^,300 checks had 

 come into the lAA offices. The lAA 

 annual report for 1927 says. They sent 

 in applications with checks attached pro- 

 \iding the necessary free surplus re- 

 quired under the Uniform Mutual Law 

 of Illinois. The company started operat- 

 ing A|iril 1st. 1 he insurance was put 

 into effect as of noon on that date." 



I'rom then on the owner of a car to 

 be insured paid an initial sum of S2 5. 

 Of the S2'>, S'i was a policy fee which 

 paid the cost of getting the business on 

 the books and of printing the policy. 

 Ten dollars was a premium deposit to 

 cover the cost of insurance for six 

 months. The remaining SlO was put in 

 the surplus of the company and entitled 



• This piiture was taken about 6 monttis ago. 



the owner to one surplus share in the 

 company. 



^X'hcn the six months period was 

 ended, the policyholder paid his share 

 of losses and expenses which automati- 

 cally restored the policy to good stand- 

 ing, liach surplus share was credited 

 with a proportionate part of the profits 

 ot the companv. 



The company limped along on this 

 basis until October 1. 1927. at which 

 time it was possible to ascertain the cost 

 of doing business. On that day a call 

 for premiums was sounded. I'ull cover- 

 age on a new f'ord was olfereil for the 

 remarkably low cost of Si. 90 and' on an 

 old Ford for S i. lO. 



By December 15th of the first year. 

 Illinois Agricultural Mutual Insurance 

 Company had 6,-4 16 policies in force. 

 That was a good showing for a company 

 only eight months old. but it is a small 

 figure when compared to the ^ i.dOO 

 policies now in force. 



During the ten years of its existence 

 the board of directors of the company, 

 which are identical with the board of 

 directors of the lAA, ha\e firmly held 

 to the original plan and purj-iose of the 

 company, namelv, to render a coopera- 

 tive insurance service exclusively tor the 

 I'arm Bureau member and his family. 

 The experience of the company proxes 

 beyond a doubt that Farm Bureau mem- 

 bers are really preferred risks. 



In 1933 it was found that original 

 'surplus share plan" of the coQipany was 

 making it difficult for some Farm Bu- 



reau members to take out insurance. The 

 requirement of the surplus share plus the 

 rather substantial deposit premium ran 

 the cost to new patrons too high. A 

 new plan of operation, called the "sur- 

 plus fee plan." was set up. 



'This plan provided tli.it the farmer 

 pay only the regular policy fee plus the 

 going SIX months premium j-'lus an in- 

 terest charge on the money lie kept at 

 home and was not asked to deposit as 

 vere previous policy holders, A. E. 

 Richardson, manager, says. 



By 1 935 the surplus of the company 

 had reached the point at which it was 

 deemed advisable to write only guar- 

 anteed rate, non assessable contracts. AH 

 the old contrails were taken up .uul new 

 policies issued. More than a cjuarter 

 million dollars was returned to jxilicy- 

 holders of the comp.my at that lime. 

 riiis liiiid u .IS the accumulation ol sur- 

 jMus sh.trc .uid excess premium de|X)sits. 



Richardson points out. loday the 

 company is operating under a cash prem- 

 ium plan,' th.it is, the policviioMer pays 

 in advance the cash premium lor six 

 months. This is the rate lor six months 

 and the policyholders are not liable for 

 any additional premiiuii lor any cause. " 



During the early years ol the company 

 and up until I9>x only 20 j-'olKyholders 

 in each 100 reported claims. .Since then 

 the percent.ige of claims has steadily in- 

 cre.ised. In 19s i. 22.2 per cent of the 

 policyholders were involved in accidents. 

 In l';i^ the percentage increased to 2M.1 

 per cent and in 19 36 it grew to the 

 astounding figure ol sl.I per cent. 



Greater farm income is believed to be 

 a t.ictor lor the larger numlKT ol acci- 

 ilenls. With more money on which to 

 travel, farmers are driving more an^i are 

 going to more distant |X)ints. 



1 he l.ict that the company is issuing 

 more policies carrving more forms of 

 cover.ige is .ilso a lactor in the increas- 

 ing number of claims reported. Policy- 

 holders are now entitled to report claims 

 tor d.im.ige not covered by e.irlier |-voI- 

 Kies. 



When the company Ixiian in I'.i2~ it 

 had three emplovces. It now employs (8 

 persons. Half of this numlx.r is em- 

 ploved bv the claims department ot which 

 L. \' Drake is superintendent. 



In contrast to the three desks original- 

 Iv used vciiich look up OnK one small 

 corner in the lAA olfice, the company 

 now txcupies niore' than i.OOO sijuare 

 feet of space on the tloor ..hove the I.\A 

 offices in the 1 ransportaiion binlding. 



Two employees who were with the 

 company in 1>)2~ are A. 1!. Richardson, 

 man.iger, and F. J. Frnst, the managers 

 assistant. 



APRIL, 1937 



27 



