2024 Policyholder Newsletter
A Message from our President
Cost of Doing Business
In my message to you last year, I described the challenging year with the rising costs of doing the business of insurance and how our lives have changed incrementally coming out of Covid. The costs of buying further protection from an accumulation of losses were referenced as a related rising cost trend as well as your organization being asked to keep more of the losses it sustains, similar to being asked to take a higher deductible. I also referenced that these ‘trends’ would likely continue into 2024.
In May of this year, the Mutual of Wausau Group sustained over $9 Million in losses over a 72-hour storm period. The average cost of claim from this recent storm is the highest per claim event in our history. The Group has sustained similar events in the past four out of five years leading to a number of changes in the past 24 months.
Essentially, 2024 was a year of more of the same. I hate to say or overuse the phrase ‘welcome to the new normal’ as normal is relative. It is a new normal if you agree that the cost to build a new home or repair an existing home will never be what it was as little as 2 years ago. Beginning in late 2023 and shared in this very newsletter last year, the Group began to increase its rates. Subsequently, rates were reviewed again mid-year 2024 with further review heading into 2025. Rate adjustments were implemented at both points in time which will work through all policies over the next 12 to 18 months. These are not easy decisions, but one that the organizations feel is necessary to adapt to the ‘new normal’ and return to profitability.
Profitability is essential in any organization. As a member of a mutual insurance company, you are its owners. Profitability is essential for the longevity of these institutions. In a related article in this newsletter, we will share information that Mutual of Wausau Insurance Corporation will begin its 150th year on December 27th, 2024. We must make these changes to continue to build upon the legacy that was provided by those policyholders that felt ‘neighbor helping neighbor’ was a good business model and that we should form this mutual insurance company to formally help each other.
As you receive your renewal information next year, you will notice the above referenced changes being made to your own policy. Similarly, these changes are being made by all insurance carriers doing business in WI, and frankly, in the nation. As a form of reference, WI is still one of the best places in the country to obtain and have the ability to pay for property and casualty insurance. WI ranks 43rd in the nation as to the average cost to insure your home meaning that it will cost you more to insure your home in 42 other states. In that respect, we are fortunate and the amount we ask policyholders to share in claims in the form of deductible is also very modest in comparison to the overall protection being purchased and in comparison to deductibles in other states.
In the end, we do recognize that we, as is present in other areas in our lives, are asking for more to be able to continue to help our neighbors and continue to have our neighbors help us. I know there are policyholders that can say, ‘why is my rate going up and I have never had a claim?’ That is certainly true, but at some point, it might be you or I that has that next claim. Insurance is built on the law of large numbers. The probability of each and every policyholder having a loss is low which is why in comparison to the coverage that is being purchased, your premium is a very small fraction of what the total claim could be whether that be from a fire, a storm, or a simple slip and fall on your property. The decision to buy insurance becomes not a ‘need to’ or a ‘have to’ but a ‘want to’. Not having that protection can be just as devasting, if not more.
We feel better days are ahead but at the same time, we want to be direct with you our policyholders, our owners, on the challenges being faced at your mutual and in the insurance industry. 2024 will mark the fourth out of our last five years where the Corporations have not been profitable in insurance operations. The last two years have produced the largest losses historically speaking. Our actions, we feel, represent what is needed to begin our 150th year in pursuit of a ‘new normal’ of profitability in an era of higher costs of materials and labor.
As we exit the season of Thanksgiving, we want to thank you, our policyholders, for your business. Our wish as we enter the holiday season is to continue as your insurance provider. Have a safe and wonderful holiday season!
Todd Lentz, President and CEO
Edition Highlights
Save the Date: Celebrating 150 Years!
Marketing Updates
Claims & Loss Control Recap
Underwriting News & Developments
Scholarship & Grant Awards
Staff Announcements
Annual Meeting Information
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