At Farmers Union Insurance, we are centered on the communities we serve. Policyholders own the company and elect the Board of Directors. Rates are developed for our local area, and management staff answers to the elected Board of Directors. Rates are affected by our local expenses, claims paid, income, and other factors. Yet, we do not live in isolation from the costs created by events elsewhere in the world.
Like all insurance companies, our Mutual purchases reinsurance from a company that provides “insurance for insurance companies”. Farmers Union Insurance has coverage for occasions where local claims exceed a certain limit. Therefore, if a local catastrophic event creates covered property damages for a large percentage of our policyholders, there is no concern that the claims will exceed our capacity to pay them.
Yet, this security comes at a price. If reinsurance companies experience large losses due to covered damages in other parts of the country (or world), our costs for reinsurance may increase.
We also cannot control the costs of building materials or labor. For replacement policies, the costs for claims are subject to the cost to replace covered losses in today’s dollars. Sadly, the costs of some building materials have skyrocketed in recent years.
Rest assured, Farmers Union Insurance remains committed to providing the competitive insurance products with great service to our local part of the world.
