There’s no real secret why the Farm & Home Mutual Insurance Association in Washington has remained in business for 150 years – establishing itself as Washington County’s oldest continually operating business in the process.
It’s all about building local relationships and holding fast to a proven business model – insuring properties for the benefit of its members, according to mutual manager Suzanne Wood, who’s responsible for the majority of the agency’s ongoing operations.
“The model has scaled throughout the years,” said Ms. Wood. “It’s just a good concept. If you have the membership and it’s being run appropriately, it really can’t fail.”
The agency observed its sesquicentennial May 7 with a free public celebration on the square in downtown Washington, featuring music, food and drink in a building that’s right next door to its original location.
Farm & Home Mutual traces its history to April 3, 1874, when a small group of farmers met and, after several preliminary meetings, decided to organize The Farmers Mutual Insurance Association of Washington County for the purpose of insuring farm property at reasonable rates.
“If someone’s farm went down, they had what we call premium,” Ms. Wood said. “Essentially, the same concept happens today. We all pay premium for our homes and farms. And then if there’s claims, that money goes to pay everybody’s claims. So essentially, the policyholders own the mutual. ‘m just almost like an executive director.”
Today, with about 1,100 members in 15 Eastern Iowa counties, Farm & Home Mutual is one of 80 farmers’ mutual insurance associations in the state of Iowa.
The Washington County agency, like all others in Iowa, is governed by a locally-based board of directors and is registered as a 518a organization under the auspices of the Iowa Insurance Division, including quarterly financial audits.
The association primarily serves as an insurance underwriter, with nearly all policies written by a network of 10 insurance agencies in its 15-county region.
“We don’t sell policies here,” Ms. Wood said. “We aren’t agents. Our agents sell policies and send them to us, asking us to take a look at a property. Then we inspect it and value it. Maybe we don’t want it, but if we do, we underwrite the policy and create it here.”
Policy rates are designed to be competitive in the insurance marketplace, Ms. Wood said, and any surpluses are reinvested conservatively into a fund to cover potential catastrophic losses.
The agency itself is also reinsured through Grinnell Mutual, and in turn through an even larger agency.
“If I have a $20 million storm, I don’t pay $20 million,” Ms. Wood said. “I pay a cap, and Grinnell Mutual steps in to (fill) the gap. Okay. Then you have Lloyd’s of London, who’s there to bail Grinnell Mutual out. Let’s say Grinnell Mutual has to pay $200 million before they dip into Lloyd’s of London. I pay a certain amount before I dip into Grinnell Mutual. So that’s how we’re protected. We have an insurance policy.”
Ms. Wood has worked for Farm & Home Mutual for seven years, the last six as mutual manager. With a “totally unrelated” psychology degree from the University of Iowa, she had previously lived outside the area and worked in the technology field, but returned about a decade ago to deal with a health event involving her father, who had once worked at the agency as an adjuster.
“I started out by doing claims,” she said. “That’s one of the toughest jobs. Then I just moved into a management position, and now I wear all kinds of hats. I talk to the lawyers, the investors, I run a drone sometimes, I even go out to a farm at times. I know all aspects of the business.”
Farm & Home Mutual’s client base has changed dramatically over the past 150 years. At the outset, nearly all policies were written for farms and other agricultural interests, but the association began insuring homeowners and other businesses in the 1920s, and today only about 40% of members are active farmers, Ms. Wood said.
The 2020 derecho significantly impacted the association, Ms. Wood said. “We insure in Linn and Johnson, so we got nailed and we experienced our first catastrophic event, when claim teams come in from all of the other states,” she said. “Cedar Rapids was an absolute disaster.”
The insurance industry itself is changing rapidly, Ms. Wood noted. “Mutuals have been known to have better rates, but now we’re having to catch up with the other places, because a $30,000 roof four years ago is now $50,000,” she said. “So we have got to catch up our rates.
“It’s a crazy industry right now,” she added. “People are getting canceled. I just saw an article that said State Farm is phasing out 70,000 policies in California. They don’t want the risk. And it’s spreading everywhere. We’re in a climate in the insurance industry right now that we don’t really want new business. That’s no business model. We want to keep our risk at a minimum and keep growing our surplus.”
Yet even after 150 years, Farm & Home Mutual continues to be well-positioned for the future, by focusing strictly on local clients and offering competitive rates with a hometown touch – including the option to offer coverage, under certain circumstances, that larger corporate insurance companies can’t match.
“We’re smaller, and we get to know our clients,” Ms. Wood said. “When we go on an inspection, we’ve often seen them before, maybe even know their name – even some century farms that we’ve known for generations.”
