Innovating by listening to customers

Sometimes the simplest tasks can drive innovations that impact a business’ bottom line. For Ron Hilliges and Norfolk Mutual Insurance Company, considering the kind of farm equipment they underwrite and listening to their customers has helped them serve their customers better.

The problem of pivot irrigation systems

Farms — and the companies that insure them — continue to evolve. One innovation is the pivot irrigation system. You’ve probably seen them sitting in fields — long arcs of steel or aluminum supported by triangular braces. Some stretch over a quarter-mile long.

Invented nearly 80 years ago, these systems water fields more efficiently than other irrigation methods. However, severe weather can damage them. That created a problem for Norfolk Mutual and its farmers in the Great Plains of northeastern Nebraska.

There were no real guidelines on how much a pivot irrigation system should depreciate year-to-year and how long it should last. It created a stumbling block for Hilliges, his staff, and their customers. Anyone could see that the storm had caused the damage, but would the policy fully cover the farmers’ losses and get them back on their feet again?

The solution of insuring to value

Norfolk Mutual, a Grinnell Mutual member, developed its own endorsement to cover pivot irrigation systems.

“We thought we would give the customer the opportunity to insure them for replacement cost if they paid the premium on the replacement cost value (RCV). We also gave them the option to insure for 75 percent, 50 percent, or 25 percent of the RCV, which is the same amount of the claim we will pay,” said Hilliges.

It’s a win-win innovation.

“It gives the customer the ability to determine how we will settle the claim before the claim happens,” said Hilliges. “It has been an improvement in the way we’ve handled those claims.”

Innovation driving success

For Hilliges and Norfolk Mutual, innovations like the pivot irrigation system endorsement are both the investment and the return of the long-term relationships they have with their customers.

“We’re a small-enough company that those relationships can be established and maintained for a long business relationship. It’s more personal,” said Hilliges. “Many mutual insurance companies were established in the late 1800s by farmers. That’s been our backbone.  As farms change and evolve, we need to do the same thing with our insurance products.”