Grinnell Mutual Reinsurance: Farm Aid
Insurance
Written by John Zorabedian   
Tuesday, 01 April 2008
Grinnell Mutual Reinsurance: Farm Aid - American Executive - RedCoat Publishing
Dan Agnew says this mutual reinsurance company is changing to meet the needs of the farmers it was founded to serve 100 years ago.
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Farmers of the Midwest, fearing a loss of livelihood should their crops or property succumb to storms, fires, and other natural disasters, banded together in the post-Civil War years to form the first farm mutual insurance companies, after East Coast insurers refused to cover their exposure to nature’s unforgiving mood swings.

Dan Agnew, President and CEO - Grinnell Mutual Reinsurance: Farm Aid - American Executive - RedCoat Publishing
Dan Agnew, President and CEO
Those prairie farm mutuals were eventually recognized in their respective states but were limited in the amount of coverage they could write. In 1909, some astute company managers founded the company that would become the Grinnell Mutual Reinsurance Company (GMRC), of Grinnell, Iowa, to provide reinsurance for the farm mutuals. And nearly 100 years later, GMRC is providing the same services but in a far more advanced and expanded way.

“We’re one of the few companies that’s 100 years old, and our primary reason for being in business and what we do today is still similar to what we did when we were formed,” said Dan Agnew, GMRC’s president and CEO. “We just do it differently. It’s like a farmer who used horses 100 years ago to work his fields and now uses tractors and combines.”

Today, GMRC has grown into the largest primary reinsurer of farm mutuals in North America, including more than 295 member mutuals in 11 states, about 53% of the market in the region, and $397 million in premium revenue in 2007. As Agnew explained, the changing nature of the industry has forced the company to grow and adapt, acquiring new technologies and providing new services in the face of consolidation and competition.

“In the last 10 years or so in the marketplace, we’re seeing a decline in the number of our competitors,” Agnew said. “But the strength of the competitors that have survived makes them more of a competitive force because they’re bigger, like us.”

The mutuals GMRC reinsures are changing, too. They are merging, becoming bigger, and require more expertise in various coverages. GMRC has sought to fill the void of expertise by providing services such as auditing, claims investigations, and adjusting. Through a subsidiary, Grinnell InfoSystems, GMRC provides software packages to its member mutuals for accounting, policy processing, and quoting.

In 1998, Grinnell InfoSystems purchased the assets of Information Designs, Inc., a Homen, Wis. company that provided information systems to mutual insurance companies. “We have the economies of scale to offer services for these mutuals that individually they couldn’t afford,” Agnew said.

Strategic growth
GMRC’s business model is not growth-oriented but is driven by the needs of its members for their growth, Agnew said. The company also looks to expand its services as a matter of survival. “Going forward, we will continue to expand our offerings to these mutuals,” he said. “Whatever need arises, we’ll develop a program to assist them.”

Agnew said the company may seek to expand into other states where farm mutuals exist, such as Pennsylvania, New York, and Montana. But the numbers of mutuals in those states are far fewer than in the upper Midwest where GMRC operates. “We’ll look carefully as we look to expansion,” Agnew said. “Growth is not our primary goal because our business model is to offer reinsurance and insurance products and services through a partnership with member mutuals and agents in a profitable manner. Our growth model is basically to do what we need to do to service these farm mutuals, and from that source, we’ll grow. It’s been that way for 100 years.”

Adapting to the changes in the industry and the needs of its mutual members, GMRC in 2006 established a Competitive Intelligence Unit, began providing free identity theft protection to farm mutual policyholders, and continued to seek input from member mutuals on technological enhancements.

To protect itself from overexposure, GMRC passes on specific high-risk coverages through its subsidiary, the Big M Agency. As farm mutuals grow or merge, GMRC adapts its reinsurance coverages based on their financial strength. And the company provides educational programs for employees and member agents.

As the company approaches its centennial anniversary, Agnew said the company is well positioned to continue its successful model. “As the industry has changed, there will be fewer of these farm mutuals, and they will get bigger,” he said. “Their need for reinsurance will be just as real in the future as it has been in the past. We’ll still offer reinsurance, but we’ll package it with additional services.”
 
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