Has the reinsurance program at Central Illinois Mutual changed recently?

Yes.  Due to a change in Illinois law regarding reinsurance, there has been a change.

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  • Prior to 2024, our reinsurer provided us with “unlimited” catastrophic reinsurance coverage for losses related to windstorm or hail.  The change in the law permits reinsurers to offer coverage to us that provides us with “adequate catastrophic reinsurance” as defined in the law.  Our reinsurer has offered us a reinsurance contract that meets that definition.  Therefore, our reinsurance program is in compliance with the new law.
  • From the revised Farm Mutual Act: “Adequate catastrophic reinsurance” means reinsurance in an amount no less than that required for a 500-year event, based on an actuarially sound catastrophic model that limits the company’s exposure on any one loss occurrence to (i) 20% of its policyholders’ surplus or (ii) an amount authorized by the Director of Insurance.
  • As regards the peril of wind or hail, the term “loss occurrence” shall mean all losses occasioned by tornadoes, cyclones, windstorms, hurricanes, or hail stones arising from the same atmospheric disturbance and occurring during any continuous period of not less than 48 hours.
  • The notice below is required by the Illinois Department of Insurance:

“In accordance with recent changes to Section 10(a)(2) of the Farm Mutual Act (“the Act”) by the Illinois General Assembly through SB 765, Central Illinois Mutual Insurance Company will be reducing its catastrophic reinsurance coverages from unlimited catastrophic coverage to “adequate” catastrophic coverage.  “Adequate” catastrophic reinsurance coverage is defined in the Act.  This reduction in catastrophic reinsurance coverage increases the risk retained by Central Illinois Mutual Insurance Company and therefore increases the possibility that members will be assessed.”