A P U B L I C A T I O N F O R F A R M M U T U A L I N S U .

Duties and Responsibilities of aManagerConsiderations for Both Mutual Managers and DirectorsBy Gayle Cobb,Cameron Companies andFreistatt Mutual InsuranceCompanyIn our last issue of the Lautum News, weran an article on the Duties and Responsibilities of a Mutual Insurance Company director.We now turn to the duties and responsibilitiesof our managers.Duties and Responsibilities ofthe Mutual ManagerThis article was taken from GayleCobb’s Regional Meeting presentation.Gayle currently serves as a boardmember for Cameron Companies andFreistatt Mutual Insurance Company,and as a local school board member inMissouri. He is a producing partner inan independent insurance agency andis Pastor of Ponce de leon PentecostalChurch. Gayle has been very activewith the mutual insurance industryover the years. He is a past boardmember of MAMIC and NAMIC. Heis also a former manager of BillingsMutual Insurance Company.61. Directly responsible to the Board for theoperation of the company.2. Implement the policies of the Board. (Notto make policy)3. Provide current and accurate reports to theBoard. (So that the Board can makeappropriate sound decisions.)4. Keep informed on current insurancepractices and trends. (Through state andnational meetings, continuing educationprograms, CE, etc.)5. Manage company property. (Office, Officeequipment, autos, etc.)6. Recruit and appoint qualified agents,subject to Board approval.7. Supervise agents.8. Hire, train and supervise employees.9. Develop and implement a company officeprocedures manual. (Workflow, phoneanswering, vacation, staff duties & responsibilities, etc.)10. Make recommendations to the Board.11. Develop and implement public relationsand advertising program.12. Monitor office performance.13. Maintain accurate records.14. Underwrite and issue policies, endorsements and billings on a timely basis.(Insured’s want service - that truly is theonly thing that sets you apart from anyother insurance company. Pay those claimstimely as well.)15. Collect, deposit and record all monies.16. Develop a budget for Board approval.17. Prepare agendas for meetings.18. Project long-range plans for the company.19. Prepare and present for approval abusiness plan. (Review and updateannually – The plan can include suchthings as merger talks, increasing writingterritory, software programs, implementing agent contingency programs, implementing insurance scoring, etc.)20. Perform other duties as specified by theBoard.REMEMBER . if your company chooses notto hire a manager, then the Board of Directorsmust also assume these duties and responsibilities.Management Succession –PlanningIt is this author’s opinion that companies should hire a qualified manager, and thenlet that manager manage. Whoever thatmanager is, he/she becomes the leadership ofyour company. That leadership must stay instep with the changing needs of the Mutual.The Board’s view of leadership should focuson the people and the skills that will enablethe Mutual to meet future challenges.Something very disturbing is currentlyhappening in the state of Missouri to the farmmutual industry. In the last four years, sixteenfarm mutual companies have turned in theirstate charter. It is predicted that there will bethat many less companies in the next fouryears. Mutual boards have become out-datedand not willing to tackle changes over the pastfew years. As a result several smaller companies are going out of business or mergingbecause of the lack of management or management succession. Some of these companiesare very financially strong. Those boardsdecided to go along with the currentmanager’s attitude and ignore or avoid theissue of succession altogether. I think theynever worried about who may or may notreplace them “because they were planning todie at their desk.” The failure to plan forsuccession can cost your company its future.Succession planning is a topic that is—continued on page 8LAUTUMnews

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(RESPONSIBILITIES—continued from page 7)basically ignored in the mutual industry untila position has to be filled. It is a topic that canbe a ticklish matter. About as uncomfortablefor some boards to deal with as is the matterof director mandatory retirement. Nobodylikes to confront the onset of neither old agenor his or her mortality. Yet managementsuccession planning is a central duty of beinga mutual company director. Consultant DougAustin believes that management successionought to be on the board’s agenda, from timeto time; starting from the day the currentmanager turns 55.There is no one right and universalformula for handling succession. Successionplanning is:1. Finding the right leader at the right time.2. Board driven, with the current managersharing some responsibility. The manager’sshared responsibility is to ensure thatboard members have access to successorcandidates. Providing the board contact inboth social and business settings allowsthem to become familiar with thecandidate’s leadership style and trackrecord. However, having access to thesuccessor candidates is not enough. Boardmembers also need to be in a position tomake accurate and insightful judgmentsabout the candidates. Matt Keating ofNAMIC in his article “Management Perpetuation Crucial for Future Success” states that,“ To the extent that the organization has asuccession process in place, a companymanager is the keeper of the successionkeys. The manager is in the best position towork with and judge successor candidates ina variety of circumstances, have contact withhigh potential talent at other locations andknow the unique challenges and pressuresof the job. Although the manager isinvolved with perpetuation and the successors on a day-to-day basis, ultimately theboard must retain oversight and vetopower.”3. As part of this formula, the board must alsoask and answer this very important keyquestion before selecting a candidate:“What must this company do well in order—continued on next page8LAUTUMnews

(RESPONSIBILITIES—continued from page 8)to succeed?” Succeeding the next 100 yearscannot rely solely on the way we didbusiness the last 100 years.Most managers fail to think aboutsuccession until it needs to be implementedand then there is no plan to follow. Suddenlythere is a void at the top and no one has beenprimed to fill that position. Few events havesuch an impact on a company as the loss ofkey leaders, in particular the CEO/President/Manager. How that replacement is handledcould have a lasting effect on the organization.Henry H. Gibbel is president and CEO,Lititz Mutual Insurance Co., Lititz, PA. This is acompany that the leadership has been handeddown generations. Lititz Mutual was foundedin 1888, and Henry’s Grandfather was theCEO beginning in 1890. Henry’s father wasthe next CEO, now Henry, and Henry’s son isthe executive vice president, which is beinggroomed to take over someday.Mr. Gibbel states in Matt Keating’sarticle: “Our board still talks about successionplanning. It is important to have the rightpeople in the right positions at the right time.Perpetuation of a mutual is critical for thecontinuing and success of the company. Ittakes a certain type of person to fully understand and be committed to the principles ofmutuality.”Too often organizations address thesuccession challenge through the rearviewmirror. Too often they wait for someone tostep down or even worse, be removed, thenand only then they entertain thoughts of whoor what should happen next. One of thereasons little forethought is given to successions is evident in the fact that it rarely showsup in corporate business plans or strategicplanning. Companies are quite diligent inforecasting out 3, 5, or even 10 years but mostof what they plan has more to do withfinancials or product enhancements and littleor no emphasis on who or how future leaderswill guide the corporate ship.In Missouri, the Department of Insurance has very little regulation authority overthe mutual industry outside of financialexaminations. However, they have beenrequesting that some companies submit abusiness plan that includes managementsuccession. The directors of these companieshave been in the dark and are now being putin the spotlight by the Department.Bruce Thomas, president/CEO, Heartland Mutual Insurance Association, Algona,Iowa, says that his company has a long-termvision, which includes working with theirboard of directors to find a valuable replacement that will guide the organization in thefuture. “We try to do a lot of cross-training sothat the employees know how to do manydifferent things,” Thomas said. “Right now,the board would have to replace me withsomeone from the job market because no oneon staff has been here long enough to takeover.”There are only 2 options –Groom or RecruitThere is a great need to develop management talent among the mutual industry today.One of the things that we in the state ofMissouri have done is to develop a scholarship program. That program has been in placefor several years and is now able to help withthe finances of 8 different college students. Itis our hope that some of these bright kids willnot forget which industry helped them outduring those struggling college years. I believethat the lack of management depth will be amajor constraint to some company’s futureprofitability. Passing the torch is one of themost challenging maneuvers in corporateAmerica today as well as in the mutualindustry. And though some large companiesfumble at the transfer, proper planning helpedWal-Mart and others to make a smoothtransition. As a director, I have been involvedin both — a successful transition and afumble transition. And I can assure you thatthe fumble cost us more than just a monetaryvalue. (Employee morale, agents respect, andrespect among the insurance industry.)Succession planning grooms firms forsuccess. Succession should be a process, not ahorse race. With so much at stake, politics andemotions can come into play even in oursmall mutual company. That is why a wellplanned and executed process is essential formaking transition from one manager to theAnnual ConventionStrategic Par tnersWe would like to express ourappreciation to the following companiesfor so generously donating funds to helpsponsor our 124th Annual Convention.Five Star PartnerRockford MutualThree Star PartnersGrinnell Mutual Reinsurance CompanyRockford Mutual withGuy Carpenter & CompanyTwo Star PartnersAll States Ag PartsBradford Victor-Adams MutualForreston MutualGreen Garden MutualIllinois Mine Subsidence Insurance FundOne Star PartnersKane County MutualMt. Carroll MutualUnited MutualAdditional SupportersBelvidere MutualBig Rock County MutualBob Reiss AdjustingHome Farmers MutualIndustry MutualPeru Waltham MutualTown & Country MutualMagnolia Evans Mutual—continued on page 182005 third quarter9

IAMIC 2005-2006 CommitteeMembersBudget CommitteeForms CommitteeRonette Payne, Chairman, Frontier MutualDavid Campbell, Magnolia Evans MutualHarry Fehrenbacher, Heartland MutualRoger Needham, Forreston MutualMike Davis, Chairman, Forreston MutualDavid Campbell, Magnolia Evans MutualBev Fick, Bradford Victor-Adams MutualTricia Mickley, Mt. Carroll MutualRoger Needham, Forreston MutualJackie Rakers, Nokomis Farmers MutualMalcolm Rowland, Rockford MutualDoug Sullivan, Svea MutualLinda Wares, Belvidere MutualConvention CommitteeHarry Fehrenbacher, Chairman, HeartlandMutualCathy Carlson, Bradford Victor-Adams MutualMike Davis, Forreston MutualSandy Bear, Watseka MutualDavid Campbell, Magnolia Evans MutualRick Etheridge, United MutualVal Kaiser, Grinnell Mutual ReinsuranceScott Krum, Rockford MutualLes Mehrtens, Heartland MutualAmy Murphy, Marshall MutualRoger Needham, Forreston MutualDiane Powers, Mt. Carroll MutualJackie Rakers, Nokomis Farmers MutualHarold Read, Berlin MutualLinda Wares, Belvidere MutualGovernment RelationsCommitteeDavid Campbell, Chairman, Magnolia EvansMutualMike Davis, Forreston MutualRick Etheridge, United MutualHarry Fehrenbacher, Heartland MutualMegan Heeg, Forreston MutualDorothy Henderson, Grinnell MutualReinsuranceBrent Larsen, Grinnell Mutual ReinsuranceJoe Reid, Hamlet MutualSandra Wulf, IAMICEducation CommitteeRoger Needham, Chairman, Forreston MutualMalcolm Rowland, Chairman-Elect, RockfordMutualChuck Aherns, Heartland MutualLyle Bruning, Town & Country MutualDave Christensen, Frontier MutualMike Davis, Forreston MutualBecky Deters, Home Farmers MutualBev Fick, Bradford Victor-Adams MutualScott Krum, Rockford MutualLawson Lankford, United MutualRonette Payne, Frontier MutualBill Peck, Horse Prairie MutualJim Polish, Farmers Mutual HailBruce Pollock, Carthage MutualWendy Tharp, Marshall MutualRenee Walters, Farmers Mutual HailLinda Wares, Belvidere MutualFarm Mutual Task ForceDave Christensen, Chairman, Frontier MutualMike Davis, Forreston MutualRick Etheridge, United MutualHarry Fehrenbacher, Heartland MutualBev Fick, Bradford Victor-Adams MutualChuck Jones, PLN MutualDoug Sullivan, Svea Mutual10MAP CommitteeDean McHugh, Chairman, Carthage MutualDave Christensen, Frontier MutualMike Davis, Forreston MutualHarry Fehrenbacher, Heartland MutualBev Fick, Bradford Victor-Adams MutualDoug Sullivan, Svea MutualJudy York, Enfield Farmers MutualNominating CommitteeMike Davis, Chairman, Forreston MutualBev Fick, Bradford Victor-Adams MutualBecky Deters, Home Farmers MutualDean McHugh, Carthage MutualSteve Prosser, Central Illinois MutualJoe Reid, Hamlet MutualDoug Sullivan, Svea MutualPublic Relations CommitteeJackie Rakers, Chairman, Nokomis FarmersMutualLinda Childers, Green Garden MutualHarry Fehrenbacher, Heartland MutualDave Fozard, Prairieland MutualMarian Keifer, Jefferson County MutualMilissa Weber, Heartland MutualLAUTUMnews

Boone County Fire ProtectionDistrict #2 Named IAMIC FireDepartment of the YearThe 2005 recipient of the Fire Department of the Year award embodies all that wevalue in our fire departments – courageousness, determination and dedication. It is withgreat pleasure therefore that we presented the2005 Fire Department of the Year award to theBoone County Fire Protection District #2.District #2 is one of the largest volunteerFire Departments in the state—covering 144square county miles. Currently there is the FireChief, one Assistant Chief, five Captains, fourEngineers, three Trustees and 33 Linemen whocontinually receive the proper training onequipment and procedures in order that fireprotection at the volunteer level is alwaysmaintained at the standards of today’sprofessional units. The department has twostations strategically placed within theirdistrict in order to serve over 10,500 countyresidents.In their beginning years, volunteers werepaid 2.00 per call, with many giving backtheir earnings to help support and sustain thedistrict. Today, 50 years later, the men andwomen volunteers are paid only slightlybetter, at 5.00 per call, with a waiting list ofprospective volunteers.Belvidere Mutual, the company whonominated the District, experienced a housefire in early 2004. District #2 was instrumentalin helping save the dwelling before it becamea total loss. Within just a few minutes of theinitial page, many of the firemen were alreadyon the scene taking the necessary steps neededwhile waiting for the trucks to arrive. Thisparticular fire wasa challenge for thefirefighters. Notonly did they havea major fireblazing, but theyalso had to dealwith the winterelements as heavyice had formedfrom a previoussnow/ice storm,making it verydifficult to get around. Walking on pure icewith all their gear proved to be a challenge;despite this, they still managed to get controlof the fire and were able to keep the housefrom becoming a total loss.With 57 years of dedicated and committed community service behind them, theycontinue to strive forward, ever looking forbetter equipment and more advanced trainingfor their crew in order to bring the bestpossible service to their community.The dedication and determination thatthis department has diligently put toward thebetterment and safety of their community earnsthem badges of honor with every service call.Fire Chief Melvin Johnson with members of the Boone County Fire ProtectionDistrict #2 was presented with the award atthe IAMIC Annual Convention on August 21in Springfield. Congratulations to everyone atthe Fire Protection District for being namedthe Fire Department of the Year! This year marks the sixth thatIAMIC has recognized an IllinoisFire Department for their contributions to their communities. Theaward was established in 2000because of the importance of firedepartments in preserving life andproperty in our local communities.HOBBY CLAIM SERVICELET OUR INDEPENDENTADJUSTERS HANDLE IT ALLWITH JUST ONE CALL! AUTO PROPERTY LIABILITY CATASTROPHE RISK INSPECTIONSSERVING MIDWESTERN &MIDEASTERN ILLINOIS,SOUTHEASTERN IOWA, &NORTHEASTERN MISSOURIOFFICES LOCATED INLAHARPE & BLOOMINGTON, ILP.O. BOX 473, LAHARPE, IL 61450PHONE: 217-659-7989 FAX: 217-659-7990 E-MAIL: hobbyclaim@winco.net2005 third quarter11

Roger Needham Named IAMICVolunteer of the YearWhere wouldwe be without ourvolunteers? OurAnnual Conventioncould not happen,neither could anyother educationprogram. Ournewsletter would berather bare and ourlobbying effortsgreatly diminished.Volunteers are thelifeblood of IAMIC.The Volunteerof the Year Award wasdesigned to recognizeone of the many individuals that step forwardto serve. Roger Needham, AIC, AIS ofForreston Mutual Insurance Company inForreston, IL was named our very firstrecipient of this award and was recognized atthe Annual Convention for his many contributions to IAMIC and the industry.Roger is an amazing volunteer. He doesso much for the association it is hard to thinkof a week that goes by without there beingcontact between him and the association’soffice or an event over the last year that hasn’thad his fingerprints on it. He is always willingto volunteer and has spent innumerable hoursworking on IAMIC projects and events.He has served on a number of committees—in Illinois, Missouri and for NAMIC, hasdelivered many different speeches for us andwas elected at our Annual Convention to serveas the Vice Chairman in 2006.Roger Needham is a tremendouslydedicated volunteer and a great asset for theassociation. Congratulations Rog

Let’s not miss the boat by rejecting a new concept that conflicts with old ways of thinking. Don’t allow our beliefs and . Township Mutual Insurance Company Triton Mutual Insurance Company 130 Years Bureau County Mutual Insurance Company Delavan Mutual Insurance Company