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Insurance Renewal Strategy Yields Significant Savings

Sometimes it’s worth going back to the drawing board, even with existing partners, as the FCCS Risk Management and Insurance team proved with the 2024 Farm Credit Captive Insurance Company insurance renewal, which saw a premium increase of less than 1%, compared to the 6.5% forecast last Fall and the 15% industry average.

“Rather than simply retaining the same insurance carriers, we put all our coverage lines out to bid, telling everyone, including our long-term partners, that it was a competitive renewal process,” says Lisa Parrinello, Vice President of Risk Management and Insurance Services for FCCS. “Our initial estimate was based on beating industry averages, as we historically do, and we’re very pleased that our rigorous renewal strategy undercut our predictions so dramatically.”

The Captive carries the combined buying power of the entire Farm Credit System, giving power to its negotiating position with the commercial market. It also spreads coverage across multiple insurance carriers – 56 in all – to ensure the best coverage for Farm Credit’s needs for the best premiums.

For the 2024 renewal, the premium increase was restricted to 0.5%, even as coverages were strengthened. Much of the rate increase was due to the increase in workplace violence incident limit from $1 million to $5 million to address active shooter exposure, which has increased since the coverage was first purchased in 2012.

Despite its unparalleled success in restraining insurance cost increases, the Captive continues to reduce overall risk through its 15-year strategy of shifting increasing segments of insurance from the commercial market to self-insured coverage. As a result of last year’s performance, the Captive’s Board of Governors has voted to return $3.5 million in patronage returns to Farm Credit members. This is a reduction from recent levels, with the excess retained to build capital surplus that can cover future claims as the Captive’s exposure increases year over year.

“Long-term, we need to build our financial surplus each year in preparation for bringing each subsequent segment of insurance coverage under the Captive,” says

Brian Clanton, FCCS Chief Risk Management Officer and EVP. “Even with a smaller patronage payout, our ability to keep premium costs low has translated to millions in savings each year to Farm Credit.”

For more information about the Farm Credit Captive Insurance Company or other FCCS Risk Management and Insurance services, contact Lisa Parinello at 303.721.3214 or via email.

Click here to learn more about The Farm Credit Captive Insurance Company with this brief video.

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