Small mutual insurance companies have a rich history in the United States, deeply rooted in the agricultural and rural communities of the 19th century. These companies, sometimes known as town, county, or farm mutuals, were established to provide affordable insurance solutions tailored to the needs of local farmers and residents. For the purposes of this paper, we will consider small mutuals statutorily authorized to write only specific lines in specific territories and refer to the companies as “county mutuals.”
Many county mutuals are small, with total premiums written ranging from $50,000 to $30 million and have limited geographic diversification. In recent decades, they have evolved with modern insurance regulation by partnering with specialized reinsurance companies that provide capital, diversification, and expertise. In 2023, capacity changed in its ability to offer historical levels of reinsurance, and this dynamic is changing who and how reinsurance partners interact with small mutuals, particularly in the Midwest.
Since 2021, the number of county mutuals operating has decreased by at least 169, mostly from merging with other mutual insurers. The price of reinsurance continues to exceed historical levels, and county mutual premiums have typically not kept pace with inflation rates.
This report describes a path forward for county mutual insurers, including minimum thresholds for operating capacity as they transition to be less reliant on reinsurance. It also presents several arguments for why it is important to preserve county mutual insurers in their communities. As described in more detail below, county mutuals insure otherwise underserved populations with distinct needs in rural areas. They also serve their local communities in ways that improve risk management and quality of life for residents. It is not clear that other insurance companies will rush to serve markets with the same offerings if county mutuals close.
