A note from PEMCO's CEO about your insurance

September 19, 2023 by PEMCO Insurance

MicrosoftTeams-image-(49).pngDear PEMCO policyholders and community,

Thank you for being a part of PEMCO Mutual Insurance Company and for trusting us to be with you as your insurance provider. We appreciate your loyalty. 

We’ve received a lot of feedback from policyholders in recent months as we’ve made changes to ensure we can continue to fulfill our promises, now and in the future. We hear you. I’d like to talk about some of those changes with you. 

The following questions are from real PEMCO policyholders. Perhaps you share some of the same concerns? My intent in the answers below is to address them. As always, your feedback is welcome.  

6-month Policy 

“I’d like to see an honest rationale for the change from yearly to 6-month renewals...Telling me that you went to 6-month terms goes a lot deeper than simply saying you want to ‘react more quickly to changes in the market.’”  

 Like many other carriers, PEMCO shifted to a 6-month auto policy to better manage the current economic environment. Simply put: the cost to cover our policyholders' claims currently far outstrips the premiums we collect to pay them and it’s no longer prudent to absorb the losses.  

Why have the claim costs increased so much? While the number of accidents hasn’t risen significantly, the cost of repairs and vehicle replacements has skyrocketed. Today, the insurance industry reports that 21% of auto collision claims result in a total loss.  

Our experience isn’t much different. Higher collision speeds, big increases in repair part costs, supply chain issues, surging medical costs, and skilled labor shortages are all creating costly delays. They are also running much higher than general inflation. During my 30 years in insurance, I have never experienced such disruption and I look forward to when it’s over. 

That said, we understand that rate increases are tough for our members, and our team deeply empathizes with and hears your concerns. Like other insurers, however, we must adjust our charges to cover the actual cost of claims so we can continue to cover them. Applying rate changes on a 6-month vs. 12-month basis allows us to do that. 

Increased rates 

“PEMCO has been our choice for insurance for many years. We’ve been loyal customers, never making a claim. Even bringing them our adult children and friends! So how do they thank us? By raising our rates by 40% this month. Why? Because they can’t make less profit. No. That would be bad for shareholders…”   

PEMCO is a mutual insurance company. By definition, that means we do not have shareholders to please. Nor do we set our rates to drive profit—rather, we are driven to fulfill our promises to you, our members.  

We sincerely appreciate our long-time policyholders and their loyalty to PEMCO. And we completely understand why, after many years of stable economic conditions and incremental changes in rate, our recent increases might be frustrating and surprising.  Especially for policyholders who haven’t had any claims, and at such an unusually high rate. 

That said, the nature of insurance is that we pool our policyholders’ risk. This means that premium costs are impacted not just by what you do as an individual, but also by what is happening with our policies collectively. Because insurance is more about what could happen versus what did happen. (For example, a significant portion of the claims we pay helps to restore our customers when accidents are caused by other underinsured or non-insured drivers).   

As mentioned above, recent macro-economic conditions such as inflation, supply chain issues, labor shortages, etc., have caused the cost of claims to far outstrip our premiums. Again, although a 40% increase is not the norm, we must raise rates to cover actual costs so we can continue to meet our members' needs, now and in the future. 

We are with you 

Please keep an eye out for more information in future issues of Perspective, as well as updates on our Facebook page and Instagram account (@pemcoinsurance). While we can’t change the economic climate in which we serve you, we will continue to share what is impacting the insurance industry and the actions we’re taking to ensure we can continue to fulfill our promises to you and all our policyholders.  

Thanks again for your loyalty, support, and feedback.  

With respect,  


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