State regulators say mutual insurance companies that provide property coverage to rural Missourians will be financially stronger because of a new reinsurance requirement.
Missouri Department of Insurance reports that a new state regulation requires each farm mutual to carry enough reinsurance that future losses would not deplete its surplus by more than 20 percent in one year.
The change was made after a large farm mutual in southwest Missouri suffered significant financial stress after claims from the Joplin tornado of May 2011.
Missouri mutual insurance companies are generally nonprofit cooperatives that provide coverage for homes and businesses in much of rural Missouri.
“This new requirement prevents farm mutuals from taking on more risk than they can handle. That protects their customers, who are mainly rural Missourians,” stated department Director John M. Huff.
The new regulation takes effect Jan. 1. It was supported by the Missouri Insurance Coalition, the Missouri Association of Mutual Insurance Companies and the National Association of Mutual Insurance Companies.
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