EXTRA 



fanners Mutual JSews 



14 



January 1, 1938 



No. 1 



TART GUARANTEED RATES 

 N FIRE-WIND POLICIES 



ABOLISH 

 ISSESSMENTS 

 IN NEW PLAN 



Ifter the premium is paid on 

 land windstorm policies un- 

 the change in rates and 

 |cedure, there can be no fur- 

 assessments. When you 

 te out a policy you will 

 Dw exactly the maximum 

 fet. But the net cost in the 

 fig run will be determined by 

 dividends the company 

 ay be able to pay out of sav- 

 zs. The amount of fire and 

 pndstorm losses, and the cost 

 operation will determine 

 DW rapidly surplus can be 

 bcumulated out of which to 

 ay dividends. Each policy- 

 lolder can assist in cutting 



Jsses by preventing farm fires. 



New Policy Contract 



The new Insurance Code of Illi- 

 Jois, under which Farmers Mutual 

 vill operate after Jan. 1, requires 

 Jhat the pohcy form known as "New 

 iTork Standard" be adopted. On all 

 business issued at the new rates, the 

 new poHcy contract will be used. 

 iTTiis contract provides for a flat 

 rpremium, no inspection fee, and no 

 ( contingent liability. 



The change to the new contract, 

 requires that all policies now in 

 force be rewritten. They cannot be 

 renewed on the present basis. The 

 renewals will be written from month 

 to month as they fall due. 

 Five Year Policy Most 

 Economical 



■ The five-year term policy with 

 premium paid in advance is the most 

 economical way to buy insurance 

 under the new plan. For example, 

 in X'orthern Illinois, the rate on 

 frame, wood shingle construction on 

 the farm under the new plan is 75c 

 per $100 for one year but only $2.25 

 for five years, and $1.50 for three 

 years. If a five-year term policy is 

 taken out and paid in five equal an- 

 nual installments, the cost is only 

 $2.70. These rates can be further re- 

 duced by the use of approved and 

 certified lightning rods and fireproof 

 roofing. There is a greater allow- 

 ance for rods and fireproof roof un- 

 der the new plan than under the old. 



Cost No Higher 



Thus if a policyholder takes ad- 



/Ae A/qw l^lan 



DUE to requirements of the Insurcmce Code passed by the last 

 General Assembly certain changes in rates and procedure are 

 made necessary in the conduct of the business oi Fanners Mutual 

 Reinsurance Company. All companies other than local mutuals are 

 required to belong to a licensed rating bureau recognized by the 

 Insurance Commissioner oi the state. Member companies are 

 obliged to follow strictly the rates and rules oi the bureau oi which 

 they are members. 



The change will aiiect present policyholders as follows: (1) Fire 

 and wind rates hereafter will be guaranteed — there can be no 

 assessments and no extra charge for inspection fee. (2) All future 

 policies will be written for terms of one, three and five years. Term 

 policies issued for periods oi more than one year ore at a sub- 

 stantiol reduction from multiples of the annual rate. (3) Fire rates 

 will be the regular Inspection Bureau rates, but the company will 

 still use its own rates for windstorm and hail risks. (4) The company 

 will continue as a co-operative or mutual company. As soon as suf- 

 ficient surplus has been accumulated and proper reserves have been 

 set aside, a dividend may be paid returning to the assured any 

 excess premium which the experience oi the company shall warrant. 

 Policies wUl be not only NON-ASSESSABLE but also PARTICIPAT- 

 ING. (5) The final cost oi insurance will depend largely on the 

 losses. Careful selection of risks and constant vigilance against 

 fire will hold down losses to a minimum and pave the way for 

 dividends. (6) All policies now in force must be rewritten since 

 they cannot be renewed on the present contract basis. 



The Company asks assistance oi every Farm Bureau member 

 and every policyholder in spreading accurate information and facts 

 about the changes outlined above. 



I. H. Kelker, Manager 



Dividends To Our Policyholders 

 Depend on Farm Fire Prevention 



The fact that the minimum, guaranteed rates under the 

 new plan, which are offered under the five-year term cash 

 premium policy, are very little higher than ])resent assessment 

 rates, means that future sa\ings must come from reducing 

 farm fires. 



Every effort will be made to 

 carefully check each risk as to 

 moral and other hazards. The 

 Company expects to insure 

 only preferred risks so as to re- 

 duce losses to a minimum. It 

 also will hold down overhead 

 to the lowest possible point. 



From there on, it is up to policy- 

 holders to set the pace in low cost 

 insurance. Constant attention to fire 

 prevention means and methods by 

 every member is the surest way to 

 build up surpluses out of which div- 

 idends can be paid. 



The final costs of insurance are 

 determined by the cost of doing | 

 business. The largest single item of j 



fire Prevention 



Will Reduce Cost 



Preventing farm fires is all im- 

 portant in reducing losses and the 

 cost of operating the company. Over- 

 head is largely fixed. But fire losses, 

 the chief expense item in a com- 

 pany insuring farm property, can be 

 controlled with everyone doing his 

 part. 



So while the cold weather is with 

 us, and the danger from overheated 

 stoves and furnaces is great, check 

 the chimney to see if the bricks are 

 all secure. Protect wood that is ex- 

 posed to hot stove pipes. .Avoid 

 using kerosene and other inflam- 

 mable liquids if possible in starting 



TO OPERATE 

 UNDER STATE 

 CODE JAN. 1st 



Eflfective January 1, 1938, 

 the Farmers Mutual Reinsur- 

 ance Company will cease to 

 write fire and wind insurance 

 on the assessment basis and 

 will adopt maximum, guaran- 

 teed rates on these classes of 

 protection. 



Although the rates on fire in- 

 surance will be the regular 

 Inspection Bureau rates, the 

 companj' will continue to use 

 its own rates for windstorm 

 and hail risks. There will be 

 a slight change in windstorm 

 rates due to the elimination of 

 the policy fee, but the five year 

 premiiun to members will be 

 substantially the same as here- 

 tofore. 



The change to standard rates for 

 fire risks, which cannot be increased 

 by assessment, made possible elimin- 

 ation of policy and inspection fees. 

 While the new rate charged for fire 

 protection on a one-year policy is 

 higher than that under the old plan, 

 the cost per year under the five-year 

 term policy, payable in advance, is 

 very little more than the cost under 

 the old assessment schedule. 



Policies will be written for terms 

 of one, three, and five years. The 

 rate for periods of more than one 

 year are at a substantial reduction 

 from multiples of the annual rate. 



Change Retains Cooperative 

 Plan 



The cooperative, mutual setup o 

 the company is retained under the 

 new program. The policy will be to 

 build up adequate reserves for the 

 protection of the policyholders and 

 the company, .\fter the accumula- 

 tion of sufficient surplus, after prop- 'J 

 er reserves have been set aside, the | 

 way will be opened for the payment I 

 of dividends, or a return of any ex- j 

 cess premium which the experience : 

 of the company shall warrant. Pof I 

 icies issued by the company 

 be not only NON-ASSESSABLb 

 but also PARTICIPATING. Thu 



.^'. 



wilj ^ 



i 



cost is the losses incurred, which 



the new plan follows closely that 

 force for some time among oth i 

 cooperatives established by the Tli'- 

 nois .Agricultural .Association. Thtj 



