Letter to the Editor: Mutual insurers respond to SBJ article on 380s

A one-sided article appeared in the Springfield Business Journal recently written by Cheryl Capages where two attorneys and a Department of Insurance spokesman, Randy McConnell, were quoted in several instances that causes us a great deal of concern.

Our association is comprised of 125 mutual property insurance companies domiciled within the state of Missouri, 120 of whom are Chapter 380 companies. We would hope that a business journal just as yours would at least have the courtesy to check with the party being discussed, to hear their side of the story prior to publication of such an article. That would only seem to be responsible journalism.

The Chapter 380 companies have been serving this state since the Civil War, they operate only in the state of Missouri, owned and operated by citizens of the state of Missouri, and are needed as much today as ever before. Hundreds of thousands of Missourians are insured through their local mutual, and it would be a rare case where they are not treated with exceptional service.

To imply as Mr. McConnell did in the article that they can't complain to the department if a claim isn't paid is simply not true. What is true is that the department does not have the same standards that apply to them as they do the Chapter 379 companies, but I think you will find in the few instances that people do complain to the department about a Chapter 380 company and the department contacts the Chapter 380 company, they get a complete response to the complaint.

By the way, according to the Missouri Department of Insurance, there are fewer complaints per dollar of written premium about the Chapter 380 companies than any other segment of the insurance industry.

Mr. McConnell was quoted in the article as saying these are the least-regulated of insurance entities operating in the state and people who buy policies should understand that. We think most people do, and most people who are insured with a Missouri mutual don't feel they have to have a government regulatory body looking over every transaction.

To imply we need increased regulation to be honest, fair and effective is an insult to every person involved with a Missouri mutual. Mr. McConnell was also quoted as saying that if a person has a complaint about a claim "he has to go to court." That is certainly not true, and hopefully he knows that.

If a person has a claim complaint with a Chapter 380 company they have the right to not only complain to the department but also to visit the company in the company home office (which is usually close to them) and not only discuss it with the manager, adjuster, etc., but even bring it before the board of directors. With the exception of rare cases, there is no need for a lawyer or court to be involved.

Mr. McConnell was quoted as saying that these companies are expected to operate locally and as such the state never applied the same requirements that in the late 70s and early 80s were applied to other insurance companies.

He didn't mention the fact that we worked with the Department of Insurance in repealing and rewriting Chapter 380 in the early 80s and that the legislature passed that law effective Jan. 1, 1985, and that within that rewrite of Chapter 380, companies were given the opportunity and encouraged to expand their operating territory if they so chose and met the financial requirements listed in the law.

He also didn't mention that the department has encouraged all of the Chapter 380 companies to convert to Part II or become extended Missouri mutuals so that they might avail themselves of the provisions of this law.

Yes, the Missouri mutuals and the extended Missouri mutuals are different from those he referred to as traditional mainstream insurers, and we certainly hope they can stay that way. They keep insurance premiums in local Missouri communities instead of sending them to New York or the West Coast or Bloomington, Ill., thus helping preserve our rural communities and rural way of life.

They provide coverage to people in unprotected areas at a reasonable cost, people who might not be able to get coverage otherwise. They provide jobs for rural Missouri communities; they support the local civic clubs, youth groups and elderly of our rural communities. We often refer to them as Missouri companies for Missouri people, and they truly are.

As a representative of the business community, I would think your publication would want to share "both" sides of a story. Instead of trying to tear down a part of the Missouri insurance industry, I would think you would want to help build public confidence in a segment of the industry that has faithfully served Missourians for so long.

A reference to the thousands and thousands of claims that are handled fairly and quickly each year by the Chapter 380 companies would seem to have been in order rather than dwelling on the Billings Mutual/ Overcast case, a one-of-a-kind case that may never happen again. (It was also interesting to note no reference was made to the fact that the Court of Appeals overturned the lower court decision in this case ruling in favor of the company prior to its submission to the Supreme Court.)

In summary, I would like the opportunity to meet with you and Cheryl Capages to answer any questions or concerns about our industry as the article implies. We are very much a part of the Missouri insurance industry and plan to be for many years to come.

Sincerely,

Ron Borders

Sikeston