Page Six 



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THE I. A. A. RECORD 



November, 19} I 



•M 



Saves Policyholders $100,000 Annuclly^ 



That's How the Farmers' Mutual Reinsurance Co. 

 - Serves Illinois Farmers' " 



THE organization of the Farmers' 

 Mutual Reinsurance Company in 

 the fall of 192 5 is significant for sev- 

 eral reasons. It is not that farm mu- 

 tual insurance companies were new at 

 that time; in fact, they were among 

 the oldest ventures in co-operation. 

 Township and county fire mutuals were 

 organized in Illinois before the Civil 

 War. The Farmers' Mutual is, how- 

 ever, the first state-wide mutual to be 

 owned and operated by Illinois farmers. 



The outstanding feature of the re- 

 insurance company is that it provides 

 a needed reinsurance service to protect 

 the township and county mutuals 

 against unusual losses at low mutual 

 rates. This was the I. A. A.'s first 

 step toward developing a broad insur- 

 ance-at-cos^t program which was later 

 to produce the Illinois Agricultural 

 Mutual and Country Life Insurance 

 Co. 



The I. A. A. first took up the insur- 

 ance problem seriously in 1924. It held 

 to the belief that the organization 

 should work with the local fire and 

 windstorm mutuals and attempt to ex- 

 pand and strengthen their services. 

 ~^~^ " Work Together ~ 



Late in 1924 the I. A. A. insurance 

 committee met with the president and 

 secretary of the Illinois Association of 

 Mutual Insurance Companies, together 

 with officers of various farm mutuals, 

 to consider the problem. It was the 

 unanimous opinion that a plan to pro- 

 vide reinsurance for the smaller com- 

 panies should be worked out. 



The following general points were 

 later agreed upon: first, the reinsur- 

 ance company should be managed by a 

 board of directors selected from officers 

 of various farm mutuals; second, the 

 reinsurance company should supplement 

 the activities of the local mutuals and 

 not compete with them; third, that it 

 should provide a form of reinsurance 

 for the risks carried by the local mu- 

 tual companies so as to protect them 

 from excessive assessments. 



By July, 1925, an active campaign, 

 in charge of V. Vaniman, director of 

 insurance service for the I. A. A., 

 was underway to secure the 200 appli- 

 cations with $500,000 worth of risks 

 necessary to secure a state license. The 

 I. A. A. took charge of field organiza- 

 tion work and raised the required 

 amount in a little over a month. The 

 Association also agreed to bear all the 

 expenses of promotion and organization 



-MnniiK**!' •'• H. K«>Iker nnii hiw Mecretary, Edythe Liindquftit 



and to grant the company a loan of 

 $10,000 required as a deposit with the 

 state insurance department. The com- 

 pany started operations November 21, 

 1925. 



Hail Added 



At first it issued only fire and light- 

 ning insurance, but early in the second 

 year hail insurance was added. Today 

 the company writes direct insurance 

 against fire, lightning, windstorm, cy- 

 clone, tornado, farm crop hail, and hail 

 damage to buildings, as well as specific 

 reinsurance. 



All rural property is accepted for in- 

 surance, including farm barns, dwell- 

 ings, livestock of all kinds, hay and 

 grain in stack, farm machinery, 

 churches, schools, and also property in 

 certain towns and villages in which 

 the owner has agricultural connections. 

 The company does not, however, accept 

 store buildings, public garages, etc. 

 Specific Reinsurance 



The specific reinsurance contract 

 makes it possible for the local mutual 

 companies to cede "specific" insurance 

 to the state company, thus lessening the 

 liability of the mutual company on 

 risks reinsured. The state company will 

 accept an amount on specific risks not 

 to exceed four times as much as the 

 local company keeps. Seventy-two 

 companies have signed the specific re- 

 insurance contract and have ceded to 

 the state company more than $7,000,- 

 000. 



Fire and lightning insurance rates are 

 based on classifications of property. 

 Farm property falls in one classification, 

 schools and churches in another, and 

 town property in a third. Deductions 

 are given on the cost of insurance for 

 lightning rods, fireproof roof, fireproof 

 walls, fire extinguishers, fire hose at- 

 tached, and ladder attached so as to af- 

 ford easy access to the roof. By pro- 

 viding all the precautions the policy- 

 holder may reduce his insurance cost 

 about one-third. There are also condi- 

 tions which add to the regular charges; 

 for instance, there is an extra cost for 

 insuring a building in which stovepipes 

 pass through walls or partitions, or in 

 which a gasoline engine is kept, or 

 where dwelling and barn are within 

 80 feet of each other. 



Wrote $7,066,000 in '31 



The company now has a total of 

 $22,600,000 worth of fire and lightning 

 insurance on its books. This amounts 

 to about one-half its entire business. 

 Of this total, more than $7,066,000 

 was written this year. Some of the in- 

 surance is direct and some of it is spe- 

 cific reinsurance ceded to the company 

 from local mutuals. The direct insur- 

 ance is written by the regular insur- 

 ance agents of the County Farm Bu-- 

 reaus. Losses are settled by local ad- 

 justers. 



J. H. Kelker, manager of the com- 

 pany, estimates that farmers save about 

 $50,000 annually on fire insurance in 



