Tama County Mutual was incorporated 10/23/1914
A mutual insurance company is owned and operated by its policyholders. It is run for their exclusive benefit. They are the company. There are no stockholders. Each policyholder is entitled to a voice in the affairs of the company.
Two key mutual principles; Policy holder control. Unlike investor owned corps., Mutual insurance companies are owned and controlled by its users, who are the policyholders. Member control is exercised through the democratic principle of one person / one vote. Each policy has an equal voice in the conduct of the mutual’s business.
Service at cost. The purpose of the mutual is to provide a service to its policyholders at the lowest possible cost, rather than generate a profit for investors. However, mutuals must generate net profits sufficient to cover costs and meet continuing reserve requirements.
A little history lesson now
Let’s look at the BIG picture, along with a little history the Tama County Mutual Insurance Association.
After the civil war, Insurance companies from the east were charging high rates to the farmers of Iowa. In 1879, the insurance department of New York reported rates running about $9 / $1,000 of insurance.
Farmers were spending large sums of money for insurance and receiving little protection after the loss.
There were also FAKE agents selling insurance. Without any state control, these FAKE agents would collect high premiums, then when a loss occurred, the agent couldn’t be found or the company was out of business.
The next part of our story is from a book published by the Iowa Association of Mutual Insurance Associations in 1955, called OF MUTUALS AND MEN, The story of the Rise of Mutual Insurance in Iowa.
The first mutual organized in Iowa was in Scott County, in Davenport, the present day American Mutual Insurance Assn. Of Scott County. It was 1849 and originally formed by German farmers and called the German Fire Association. The second association was also formed in Scott County.
1860 brought the First Maxfield Mutual Insurance Association of Bremer County, it’s now in Denver, Iowa. Closer to my home area, 1867 the Bohemian Mutual Insurance Association of Tama County was started and over in Marshall County, the Iowa Valley Mutual insurance Assn. of Marshall County began.
In our case, a group of farmers met at the White Pigeon school house in Carlton Township, Tama County, to organize an insurance society March 11, 1873.
At the meeting, they adopted rules which later became the articles of incorporation and by-laws of the Farmers Mutual Aid Society of Tama County. 34 persons signed the articles, it was decided to limit the territory to 4 townships, about 252 sq. miles.
There was a series of meetings at different school houses and at public sales until they secured enough members to take applications and issues policies in 1874.
The society rules forbid issuing a policy for more than $2,000 liability at any one fire, and members were assessed for every loss.
So what a difference, from a 1905 application, the Dwelling was $600, second dwelling $500, bed, clothes, sewing machine, pictures and frames, household furnishings $190, barn $300, granary $100, wagon house $50, and cattle $1,000.
Then and now, $100's of dollars vs. $100's of $1,000's dollars of coverage.
It took 26 years, the year 1900 to reach $1,000,000 of risks in force.
Name changes over the years. Farmers Mutual Aid Society of Tama County name was changed to Farmers Mutual Aid Company. Later, according to a ruling by the insurance dept of Iowa, the name was changed again to Farmers Mutual Aid Association of Tama County, Iowa. This was brought on by the Old Line companies in the east that asked that assessable companies be called an association. In March 1952, the last name change was made, to Tama County Mutual Insurance Association.
So what were some of the rate advantages with local ownership and the mutual principles?
From the state auditor’s report, looking at 1876, the state auditor was rather skeptical of the mutual companies, but begudgedly had to give them their due. The companies were under no obligation to report their business, but two had voluntarily forwarded statements.
From Linn County, the Brown Township association was organized in 1867, 9 years before, and had written risks of $560, 790. They had never made an assessment to pay losses and its entire expenditure was stated to have been $274.61.
As the years went by, the auditor gave more favorable comments, each year with a little more enthusiasm for the mutual concept.
Remember those rates from New York? $9 / $1,000?