The Insurance Company is a property and casualty insurance company that provides insurance products to individuals, farms and small businesses in Michigan. We were founded in 1876 and have served Michigan policyholders for over 133 years. We have 66 employees. We market our policies through approximately 172 independent insurance agencies. We have four business segments: personal, commercial, farm and marine. As of December 31, 2009, we had approximately 70,000 policies in force and assets of $105 million.
The Company’s executive offices are located at 933 E. Main Street, Fremont, Michigan 49412-9753, and the telephone number is (231) 924-0300. Our website address is www.fmic.com. Information on the Company’s website is not a part of this Form 10-K. The Company makes available free of charge on its website, or provides a link to, the Company’s Forms 3, 4, 5, 10-K, 10-Q and 8-K filed and any amendments to these Forms, that have been filed with the SEC as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to the SEC. To access these filings, go to the Company’s website, “www.fmic.com” and click on “Our Company/Investor Relations”, then click on “All SEC Filings.”
Our principal strategies for the future include:
A key to success in continuing sustainable profitable growth is the emphasis on and delivery of enhanced smart underwriting business rules which complements existing agent knowledge and allows for straight through processing. An advanced, next generation technology platform will allow our agency force to efficiently quote, bind and issue both personal and commercial policies. We have had excellent success with our Fremont Complete platform which is our web-based rating platform. As of the end of 2009, agents are able to quote, bind and issue personal line policies in addition to the following commercial products: Business Owners, Commercial Auto and Workers’ Compensation. We plan to continue to leverage our success with Fremont Complete by expanding the commercial products that can be quoted, bound and issued by our agents to include the commercial package policy and deluxe contractor programs. Emphasis will continue to be placed on a single unified platform that will enable our agents to manage their policies from a billing, claims and documentation environment.
Ensuring Rate Adequacy
Ensuring that products are appropriately priced is paramount for the Company to grow profitably. As we grow, so does our database of information which allows us to pinpoint those risks and characteristics that afford us the greatest profit potential. Rates and rate adequacy are continually monitored, analyzed and adjusted as market conditions and results warrant. The Company is committed to matching price to the exposure.
Increasing our Commercial Business
Our strategy remains to increase our market presence in commercial lines of business and to provide balance to our insurance portfolio. We continue to target small to middle market business focusing on main street accounts. Our recent endorsement with the Michigan Retailers Association strengthens this position.
Our success in growing commercial lines is created by focusing on strong commercial based independent agents. Also, our web-based rating technology provides an “ease of doing business” as our agents can rate, underwrite and issue business through our Fremont Complete platform. In addition to Business Owners, Workers’ Compensation and Commercial Auto, we will be adding Commercial Package Policies to our web based system in 2010. This will allow our agents to have quick turn around on middle market accounts. Along with the enhancements to our Fremont Complete platform we will be rolling out several new endorsements and products to better position the Company in the commercial markets.
Retaining and Attracting Agencies Committed to Profitable Growth
We are committed to our independent agency distribution system. The agents with whom we partner are an extension of the Company and are encouraged to participate as equity owners. Therefore, we are very selective in appointing and retaining agencies that represent the Company. In order for the Company to be successful we must ensure that the interests of the agency are aligned with the interest of the Company. We are committed to retaining agencies that produce long term profitable growth. Each year we perform a review of our agency force to determine if changes are needed or if there are geographic regions that we feel warrant representation by a new or existing agency.
Diversification of Risk
The Company has emphasized risk diversification for the last decade particularly the diversification of risk related to the geographic concentration of insured property. This process is annually modeled and the results are a decision factor for new agency appointments and pricing. Licensing in surrounding states at agent request and also for risk diversification is in process. The first state will be Wisconsin for planned service from bordering Upper Michigan agents followed by Indiana.
Reducing our Ratio of Expenses to Net Premiums Earned
We are committed to improving profitability and our competitiveness by reducing expenses. We will accomplish this by continuing to grow net premiums earned, weeding out operational inefficiencies through expanded use of technology, and ensuring that all products are appropriately priced.
Maintaining our Focus on Customer Service
While the statement, “Maintaining our Focus on Customer Service” has become a cliché, we feel that it has been and will continue to be a key component of our growth and profitability. Insurance is a service business and customer service is one of the basic ‘blocking and tackling’ strategies that we have to get right in order to be successful. While we service many ‘customers’, we work very hard to make sure that our policyholders and our agents receive the best customer service possible. We want our customers to have a pleasant experience when dealing with the Company. This ‘experience’ can be enhanced through technology by making information easily accessible through the web and by simply making sure that when our customers call they can expect to speak to a ‘live’ person, whether it is a customer service representative, a claim associate or an underwriter. We compete with many larger insurance companies in Michigan. What sets us apart from them is the relationship we have with our agents and the service we provide to our policyholders. We will continue to seek out ways to exceed our customers’ expectations.
The Company defines its operations as property and casualty insurance operations. The Company writes four major insurance lines exclusively in the State of Michigan: Personal Lines, Commercial Lines, Farm and Marine. All revenues are generated from external customers and the Company does not have a significant reliance on any single major customer or agency.
The Company evaluates its product lines based on underwriting profitability. Certain expenses are allocated based on measurements including premiums, incurred losses or other departmental employee data. Underwriting profit by product line would change if different methods were applied. The Company does not allocate assets, net investment income, net realized gains (losses) on investments or other income (expense) to its product lines.
We offer a variety of property and casualty insurance products primarily designed to meet the insurance needs of property owners and small to mid sized businesses located in Michigan. The four primary segments of our business are personal, commercial, farm and marine.