Jan Shepel
Associate Editor
MADISON
When farmers in Wisconsin needed low-cost auto insurance back in 1934, they hatched the idea of starting their own company.
By the following year, members of Farm Bureau had formed the Farm Bureau Mutual Insurance Company of Wisconsin to provide that insurance to its members. That company began operations in June 1935 and this year is celebrating its 75 anniversary.
About 750 people gathered at the Alliant Energy Center in Madison on Saturday, June 20 for a celebration of the company’s history and performance.
Today the company is called Rural Mutual Insurance and has $137 million in premiums from over 22,000 auto policies, 7,886 farm policies and 9,590 business and commercial policies. It is the top Wisconsin-based property and casualty company that does business exclusively in Wisconsin.
Peter Pelizza, the executive vice president and chief operating officer of the insurance company, said in an interview that the strength of the company has come with having people who know about agriculture and the things their customers — farmers — deal with.
He attributes the longevity of the company to the state’s agricultural base and the strong relationship between the company and farmers. “Others try to insure in these areas but they don’t understand. Agriculture is a specialty science and this company was developed by people who understand it,” he said. “Others see it as a neglected market so they get into it but fade pretty quickly because they don’t get it. They don’t know the difference between a dairy farm and cranberry farm.”
Rural has 175 employees with underwriters and agents who live in the communities where they work. Claims adjusters, who are independent contractors, are often former farmers, ag teachers and others who understand farming.
The fact that the company and those who work for it are part of the agricultural environment is one of its core strengths, Pelizza said.
The Wisconsin Farm Bureau board is also the Rural Mutual board and Bill Bruins, a dairy farmer and president of Farm Bureau, chairs the Rural Mutual board. “There are a lot of reasons why Rural has been a success. Companies don’t succeed — people do,” Pelizza said. “These people are on town boards together and go to church together and that’s one of the reasons this company has been successful.”
Had it not been for the relationship with Farm Bureau, he doesn’t believe it would have all worked out as it has. “This is what, 75 years ago, the founders of this organization had in mind.
“Because of our deep roots, the legislative and lobbying effort of Farm Bureau, and the interplay between our two organizations we’ve been able to protect the legal rights of farmers to farm. That’s our story and it’s a great testimony to a family relationship,” he said.
A Connecticut native, Pelizza previously worked for Sentry Insurance for 24 years, rising through management to head that company’s Dairyland Insurance. The transition to a company with a more nimble management system has been a good one for his personality, he said. He came to Rural seven years ago.
“We can put a change in quickly if we want to make a decision on what’s good for customers. That’s what I wanted,” he said. “We have an outstanding staff of vice presidents that complements everything that’s being done.”
Rural Mutual operates only in Wisconsin and with just under $140 million in premiums and $260 million in assets, it is one of the largest Wisconsin companies, he said. “We are making money when most companies are finding that difficult,” he said. “That’s due to our relationship with an industry that knows how to weather storms.”
Pelizza is very proud of the work Rural did to defend the farmers’ right to farm in the Zawistowski case. The company hadn’t insured the Sawyer County cranberry grower for years, but decided to help with his defense because he had been a customer in the past and because the case had huge ramifications for farmers in general.
The homeowners bringing the lawsuit alleged that his fertilizer in the lake near their homes was a nuisance, so Rural Mutual decided that they would defend the farmer because his practices were the same as they had been when he was insured with the company.
“We probably could have bowed out,” Pelizza said, “but the case was a part of who we are; our rural roots; Farm Bureau. It was important.”
Rural is one of the few companies, he said, to write pollution insurance for farmers who have good farming practices and who should be protected from frivolous lawsuits under the Right to Farm law. But the Zawistowski case could have set the wrong precedent for the company if the courts had ruled against the grower.
“We could have had tens of millions of dollars of exposure out there if the farmer had lost that case,” he added. “But the way it turned out validated our decision to write this coverage.”
With the downturn in the economy, Pelizza envisions a scenario where rural homeowners who have lost value in their properties could now blame it on the smell of the neighboring dairy farm or other farming practice nearby if the Zawistowski case hadn’t been won.
Immediately after the Wisconsin Supreme Court decision, which found for the grower, some of Rural’s competitors began to write the same type of policies. Often, competitors will try to get in on the markets that Rural has been in for all these decades, but they soon bail out because they don’t understand the agricultural marketplace, Pelizza said.
Half of all agents who sell Rural insurance have to have an agricultural background, which contributes to their knowledge of what farmers need in their policies. The company has made it a practice to have knowledgeable agents and company managers.
For example, now that wind farms are becoming more common, Rural has sent one of its officers to learn all he can about how they work, he said. Others are becoming versed on manure digesters so they will know how to insure them. Things like irrigation systems and organic operations are unique to agriculture and the company has learned what it needed to know about such things.
“How do you respond to them? We respond by keeping up with changes in agriculture and our relationship with Farm Bureau has helped with that. Our competitors do ‘me too.’ But we are the leaders in these areas,” he said.
Pelizza said that each state with a Farm Bureau organization has an affiliated insurance company and Rural is the one for Wisconsin, however it is a mutual company — meaning it is owned by its policy holders. “That makes this a dynamic organization,” he said.
The party Saturday was planned as a fun event for kids and adults, he said, but its main purpose was to pay respect to all those folks who helped build the company. “We’re doing the right thing. Our commitment to agriculture is there and it will get stronger,” Pelizza said.
