A Barton County, Mo., judge in December 2011 approved a proposal to allow Missouri Farm Bureau to assume operations of three small insurance companies that became insolvent after paying claims from the May 22 Joplin tornado.
The three companies — Barton Mutual Insurance Co., Gateway Mutual Insurance Co. and Cape Mutual Insurance Co. — are managed as the Barton Mutual Group. Collectively they have about 41,000 policyholders with homeowners and fire policies. They are licensed as extended Missouri mutuals, also known as county mutuals or farm mutuals. In general, county mutuals are small companies serving rural policyholders. There are about 90 of them in Missouri, according to the Missouri Department of Insurance.
Under the proposal, the three companies will merge into one company managed by Farm Bureau. The proposal allows Farm Bureau to invest approximately $14 million in surplus notes to restore the company’s surplus to a positive level, with the notes being backed by the Missouri Property and Casualty Insurance Guaranty Association.
It also allows the new company the financial capacity to ensure all policyholder claims are paid and policyholder coverage to continue.
The proposal additionally requires the new company to buy an amount of reinsurance deemed adequate by the department to meet future claims obligations.
The three companies had premium sales of $29 million in 2010, but reported claims of $48 million related to the Joplin tornado. The judge ordered the three companies into receivership on Dec. 1, 2011, placing them under the management of the Department of Insurance. Once the plan is implemented according to the judge’s order, the department’s control will be lifted.
“This is a win for all involved,” John M. Huff, director of the Missouri Department of Insurance said in a statement released by the agency. “Policyholders’ claims will be paid and Missouri taxpayers will not have to foot the bill. I commend Farm Bureau and Guaranty Association for partnering with us in this innovative agreement.”
Huff says policyholders must continue making premium payments to keep their insurance coverage intact. Payments should continue to be sent to the Barton County Mutual Group’s office in Liberal, Mo.
Topics Carriers Claims Agribusiness Missouri
Was this article valuable?
Here are more articles you may enjoy.
Insurers Get Green Light to Pay Less Than Billed Charges in Florida PIP Cases 
Florida Governor Signs Wind-Mitigation Funding Bills for Homes, Condos 
4,800 Claims Handled by Unlicensed Adjusters in Florida After Irma, Lawsuit Says 
Fla. Regulators’ Effort to Remove Insurer Execs May Not Pass Constitutional Muster From This Issue
