NFU Mutual

The National Farmers Union Mutual Insurance Society Limited
	Logo currently in use by NFUM
	Headquarters in the village of Tiddington
Type	Mutual
Industry	Financial services
Founded	1910
Founder	Seven farmers in the West Midlands
Headquarters	Tiddington, Stratford-upon-Avon, England
Number of locations	295
Area served	UK and Channel Islands
Key people	Nick Turner: group chief executive officer.; Jim McLaren: chairman.; /Jim Creechan: Group Head of Legal and company secretary.; Richard Morley: regulatory compliance and financial director .
Products	Life, general, pensions and investments
Number of employees	3884 (2018)
Website	www.nfumutual.co.uk

From Wikipedia, in a visual modern way

NFU Mutual is a UK insurance composite. Being a mutual, its policyholder members own the business, and the executives and directors are ultimately accountable to them. The full name of the organisation is National Farmers' Union Mutual Insurance Society Limited.

The business is authorised and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, with complaints oversight available via the Financial Ombudsman Service. NFU Mutual Risk Management Services Limited, a wholly-owned subsidiary of NFU Mutual, is not regulated.

The head offices are at Tiddington. The 1984 building was designed by David Lloyd Jones for RMJM.^[6] It was one of the first to be designed around environmental sustainability.^[6]

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History

In 1910, the Midlands Farmers' Mutual Insurance Society Ltd was formed by seven farmers in Warwickshire. John William Lowe was the first Chair, James Robertson Black was the first secretary, and his farmhouse was the first office. In 1912, he became the inaugural Managing Director. He served the society for 42 years, becoming vice-Chair in 1946 and holding the post until his death in 1952.^[7] The first accounts (1911) show income of £311 and profit of £16. By 1919, premiums had grown to £4,345 and profit to £1,825.^[7]

As early as 1912, the farmers' union in Lincolnshire had approached the directors for advice about forming a mutual insurance company. They were advised to join the mutual in the Midlands that was already in existence.

In 1919, the society became the official insurer of the National Farmers' Union (itself established in 1908) and changed its name to the one it bears now. Ralph Chisholm, joined the staff during this period and went on to become the first CEO.

The First World War saw a rapid increase in the amount of land in cultivation, which allowed NFU Mutual to gain a 50 per cent increase in income.^[7]

In 1920, offices were established in Stratford-upon-Avon. One of the first directors was Sir Basil Brooke.^[7] He went on to be Prime Minister of Northern Ireland.

In 1928, NFU Mutual successfully applied to the High Court to set up a life assurance business. In its first full year, the insurer wrote more than £100,000 of sums assured. It also set up its final-salary pension scheme for the benefit of its employees. By 1930, income from premiums had risen to just under £316,000 and the Mutual had eight branches.^[7]

In the 1920s it emerged directors took mortgage loans from the business. These loans were repaid. NFU Mutual also held balls between 1930 and 1970.^[7]

In its early days, NFU Mutual employed Sidney Carter to run a film unit. Anyone attending his film shows would be educated by current affairs films and NFU Mutual insurance.

By 1940/41, over 100,000 farmers held policies with NFU Mutual and premium income reached £1million with assets at £2 million.^[7]

In 1933, taxation was introduced to cover the trading results of mutuals. This was reversed in 1944 when a tax case went to the House of Lords and the intention of the statute was defeated. The Finance Act of 1964 sought to reverse this defeat, and Edmund Chaumeton, the company secretary, led efforts to oppose regularising mutual tax affairs, a task that "every year successive governments [have been] expected to put it back in place".^[7]

During World War Two, an employee Arthur Scarf was awarded a posthumous Victoria Cross.^[7]

In the 1960s, NFU Mutual's assets reached £50m, but there was a significant outbreak of foot and mouth disease on UK farmers in 1967. The insurer had first offered insurance against this disease in 1949 but the devastation was so severe that in November 1967 it decided to stop taking new business. Support from reinsurers enabled the society to offer renewals to businesses who already had cover.^[7]

In the 1990s, Managing Director Andrew Young made some significant changes to the Mutual's operations, and the Group focused on the need to grow beyond farming.

In July 1998 the Board put before the members proposals to change the Articles in order to bring in unrestricted access to all of the Mutual's products. This gave the Mutual freedom to insure anyone, irrespective of profession or occupation. To reassure its core farming customers that the change would not have an adverse impact, a product called Mutual Advantage was set up, exclusive to NFU Members and provided extra discounts and cover for farming customers.^[7]

In 2000, Group Premium Income passed £1 billion and the company introduced Mutual Bonus, which it claimed returned £94million to policyholders.

The same year saw attempts made to create shareholder ownership and accountability to the NFU Mutual.

Former NFU Mutual director John Murray^[8] initially approached five venture capitalists in the hope of launching a bid. Windfalls for members were anticipated.^[9] Commenting to the House of Commons Treasury Select Committee^[10] on the possibility of demutualisation, Andrew Young, the then managing director said: "In our view, members of a mutual should ... decide how the business is run, and if they are not satisfied, they should get rid of the Board and the management rather than demutualise ... current governance mechanisms give ample opportunity to do that."

In 2002, Andrew Young retired and was succeeded by Ian Geden, who came from a farming family near Stratford-upon-Avon and had joined the Mutual as a professional trainee in 1969. He became Group Chief Executive in 2005 when that post was created. During his term, the general insurance premium income grew from £603m to £944m.^[7]

In 2007, a series of floods brought more than 13,000 claims representing a liability close to £100m.^[7]

In 2008, Lindsay Sinclair became Chief Executive (the first such appointment from outside NFUM). He was Group Executive for more than 12 years, before retiring in March 2021. In 2015 when NFU Mutual closed two call centres.^[11]

In 2011, an employee of NFU Mutual insurance, Gordon Murray, was jailed for a £400,000 fraud.^[12]^[13]

In 2013, the NFU was placed in a table of value produced by the Association of British Insurers for pensions annuities.^[14]

In 2015, NFU Mutual asked the Prudential Regulation Authority to make an exception and reduce the scale of reserves required for it under Solvency II Regulations. This reduced solvency obligation is still in place for NFU Mutual.^[15]

There was a swimming pool at head office until 2016, when it was closed and filled in.^[16]

In March 2021, Nick Turner became Chief Executive.^[17]

The drought that summer also saw a huge growth in farm and combine harvester fires, reported for claims and settlement ^[18] - such fires cost the Mutual around £100 million in the previous when incidents were lower.^[19] The number of fires was subsequently revised upwards to over 800.^[20] That year the Annual report stated "[A]Principal Risk and Uncertainty, Strategic [is that] NFU Mutual’s customer base changes substantially beyond expectations Unexpected changes to NFU Mutual’s current or target customer base which impact on insurable risks, including changes to the farming industry or other significant target trade sectors, customer demographic or behavioural changes."^[21]

NFU Mutual has also announced liabilities of over £170 million following Storm Arwen and Storms Dudley, Eunice and Franklin.^[22]

Following the invasion of Ukraine, NFU Mutual revealed it would divest from its Russian holdings.^[23]

The business currently underwrites around £1.825billion in annual general insurance premiums for UK policyholders.^[24] At the end of 2021, its total funds under management were £22.2bn.

The business reported losses of £143m for 2020 and an underwriting profit of £109m.^[25] In 2019, the Group made profits of £573m and reported an underwriting profit of £167m.^[26]

Losses of £290m (with an underwriting profit of £142m) occurred in 2018.^[27]^[28]^[29]^[30] That year, Nick Turner's "new business engine" also had to downgrade targets by £7million pounds."^[31]

In 2018, customer retention on renewal had stood at of 95.5%,^[32] but in 2022 it stood at to 82.6% in respect of motor customers.^[33]

I’m 2022 NFU Mutual won several industry fraud awards.^[34] In the same year, NFU Mutual’s Claims Validation Technical Manager David Phillips became chair of the General Insurance Fraud Committee of the ABI.^[35]

NFU Mutual was Which? 'Insurance Brand of the Year' for 2022'.^[36] In 2023, NFU Mutual was the only Which? recommended provider of home insurance^[37] and the Daily Mail's Best Buys team named NFU Mutual as the best provider of comprehensive home insurance.^[38]

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Services

NFU Mutual offers personal insurance products such as home, private motor, pet and travel. They also offer agricultural and commercial insurance to business customers of various sizes.^[39] In 1928, NFU Mutual set up a final-salary pension scheme for employees and establish a life assurance business, which wrote more than £100,000 of sums assured in year one.^[7]

Diverse life insurance products including term assurance are offered to the market by NFU Mutual working with AIG.^[40]

The business offers various investment and pension products and sells financial advice.^[41]

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Affiliates and agents

Agencies

NFU Mutual sells policies predominantly through a network of agents. Agents were traditionally Group Secretaries of the NFU. The Union, as employer, paid them a salary and the Mutual paid them commission.^[7] At the end of 2018, NFU Mutual had over 3,800 employees, and 654 agents working out of 310 offices.^[42]

Farming unions

NFU Mutual has made financial contributions to UK farming unions during that time. For example, in 2021, the insurer donated >£7m to the UK's farming unions.^[43]

NFU Mutual is the official insurer of the main farming unions of the UK, with these associations beginning as follows: National Farmers' Union of England and Wales (1919);^[7] NFU Scotland (1922); Ulster Farmers' Union (1930); Manx NFU (1947); Scottish Crofting Federation (1986). In 1922, NFUM became the insurer to NFU of Scotland; the Ulster Farmers' Union followed in 1930.

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Governance

Senior leadership team

These board "are responsible for the overall direction of the Company and setting the Company’s values and standards".^[44]

As of Spring 2023 it consisted of the following people:

Jim McLaren MBE (chair),
Nick Turner (CEO),
Richard Morley (Finance Director)
Rachel Kelsall^[45] (Customer Services Director),
Nick Watson^[46] (Sales & Agency Director) -

Non-executive directors are:

John Deane
Ali Capper
Christine Kennedy OBE
Jon Bailie,
David Roper,
David Smith,
Alan Fairhead.

The NFUM’s current Group Head of Legal and Company Secretary is Jim Creechan.^[47]

Beyond this the executive team has these additional people: Gina Fusco (Strategy & Marketing Director), Trisha Jones (HR Director), Tim Mann (IT Director), Iain Baker (Risk Director).^[48]

The issue of executive pay received negative attention in 2011, with the Insurance Times quoting an observer as saying: "Ian Leech, sales and agency director, received a mere 21 per cent increase.. because he retired two thirds of the way through the calendar year... Amazingly, Nick Turner, Leech's replacement, received performance bonuses of £144,000 for just six months in the post."^[49]

In 2022, Irish Farmers Journal reported financial director Richard Morley was paid £738,000 a year from the business while the current chief executive, Nick Turner, currently CEO, took remuneration of over £1.04 million from the business in 2021.^[50]^[51]

The former CEO, Lindsay Sinclair, was paid £879,444 from the business in 2021, a year in which he had left the business.,^[51]

An Long Term Incentive Plan grant is made each year with performance conditions covering a three year period. Under the rules of the plan the maximum grant for the CEO is an additional 150% of base pay, and 108% for executive directors.

Awards are subject to clawback or scale back if performance is mis-stated, in the event of misconduct or if there has been a major failure of management resulting in substantial damage to the business or reputation of NFU Mutual^[52]

NFUM does not prescribe a cap on fees or operate a standard percentage increase, and non-executive directors typically took in excess of £70,000 a year in remuneration in 2021.^[53] Of the more senior executives and directors, the chairman, Jim McLaren, took over £200,000 in remuneration, in 2021.^[54] Non-Executive Directors no longer accrue pension benefits with NFU Mutual, but some former Non-Executive Directors (or their widows) are still receiving a pension, on an ex gratia, non-contractual and unfunded basis. The total cost of these pensions for 14 former Directors or widows in 2021 was £211,437.91 (2020: £218,841).

In the 2021 report, there was a gender pay gap of 24.5% based on hourly wage (mean). The bonus gap is 50.9% (mean).^[55] NFU Mutual signed the Women in Finance Charter in October 2018.^[56]

Membership

There are around 900,000 members of the NFU Mutual.^[57] As NFU Mutual has no shareholders, a proportion of its profits, if any, are returned to policyholder members in the form of an adjustment on quoted premiums of renewing customers. A discount of between 8.5% and 13.5% (2022/2023) is currently provided, which the business brands "Mutual Bonus".^[58]

Membership is conferred automatically on holding a policy, but under the Articles of Association the Designated Officer, or the board, may deny membership to any individual for "any reason", thereby expelling them from the governance of the business.^[59]

NFU Mutual reported receiving around 3 complaints per 1,000 policies in the period 01 July 2022 - 31 December 2022.^[60]

Annual General Meeting

Under NFU Mutual's articles of association,^[61] each policy generates a distinct right to speak and vote at the Annual General Meeting (AGM), scrutinise the accounts, and hold the management to account, as well as an ownership right in the business.^[62]

The AGM is generally held at the British Motor Museum at Gaydon, Warwickshire and is open to all policyholder members.^[63]

In 2022 the business stopped circulating minutes of AGMs.

Carbon strategy

In 2022, NFU Mutual announced a carbon reduction strategy relating to its own operations and the impact of its investments. Targets include a 25% reduction in the business’s own emissions by 2025 and a 50% reduction by 2030. To support this, NFU Mutual said it aims to maintain 100% renewable electricity purchase for its occupied premises. For its investments, the insurer is targeting a 50% emissions reduction in its equity and corporate bond portfolio by 2030.^[64]

Two years previously, Ethical Consumer criticised NFU Mutual for "just talking about the climate impact of their offices" rather than the far more significant impact of their investments. NFU Mutual responded saying: "We avoid areas we consider harmful such as predatory lenders, certain munitions, and climate-unfriendly companies with no plans to help decarbonisation."^[65]

The architect-designed NFU Mutual head office building

The British Motor Museum: this venue is regularly used for Annual General Meetings where all policy holders can hold the directors and executives accountable for the conduct of the NFU Mutual's business by speaking and voting

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Subsidiaries and acquisitions

A subsidiary, Avon Insurance, was established in 1925 to provide insurance to non-farming customers,^[66] and later specialised in personal accident insurance. Avon closed to new business in 2013.^[67] The establishment of this enterprise was opposed by NFU hierarchy and the NFUM directors were required to agree that they would "consult on such matters in future".^[7]

In 1929, NFUM bought another farming insurance company, Northern Farmers. In 1930, it bought a printing business, Edward Fox & Son.^[7]

Between 1948 and 1974, NFUM had operations alongside unions in Central and East Africa, including what was then known as Rhodesia and Kenya. Operations in Kenya ceased in 1964 and Rhodesia in 1974.

NFU Mutual acquired the Islands Insurance Group in 1987, providing access to NFU Mutual products for customers in the Channel Islands.^[68]

NFU Mutual Risk Management Services Ltd is a health and safety company set up in 1997 that work with a variety of sectors including farming and manufacturing.^[69] NFU members receive a discount on some Risk Management Services through Union Advantage.^[70]

NFU Mutual Direct was set up in 1996 to provide telephone and internet call centre services.

NFU Mutual supporting neighbourhood watch with signage

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Charitable Giving

NFU Mutual Charitable Trust

NFU Mutual set up a Charitable Trust in 1998 to deal with need concerned with 'agriculture, rural development and insurance.'^[71]

In 2022 it pledged to donate £1m to 'national and regional charities' as part of NFU Mutual's overall donation of £3.25m to charity.^[72] In 2022 it donated £30,000 to help the NFU support and expand its education projects.^[73]

In the past 24 years the independent charity has distributed funds averaging around £250,000 per year.^[74]

In 2022 the NFUM Charitable Trust pledged £150,000 to Disasters Emergency Committee's Ukraine Appeal.^[75]

Farm Safety Foundation

In 2014, NFUM set up the Farm Safety Foundation, an independent charity to help young farmers challenge their behaviours and change their attitude to farm safety.^[76]

The Foundation aims is to have zero avoidable deaths on farms and run an annual Mind Your Head campaign concerning mental health issues.^[77]

Agency Giving Fund

In 2020, NFU Mutual set up a fund for its agency offices to use in order to distribute money to charities in their local communities. A total of £1m was distributed in the first year.^[78]

In 2021, the Agency Giving Fund distributed £2m to charities and in 2022 it has distributed £1.92m.^[78]

Business interruption and Covid-19

An NFU Mutual agency in Usk. One local office of over 295 nationally.

NFU Mutual sold policies which were the subject of examination in the Financial Conduct Authority test case on business interruption payments during Covid. Following the first instance decision in the High Court and the appeal in the UK Supreme Court in this case the business published a statement saying judgment of the court meant it had no liability to meet claims for COVID-19 related business interruption.^[79]

This application of the law to the products NFU Mutual sold is not considered accurate or stable by a number of policyholders impacted by the view of the management.^[80]

One policyholder involved said early on: "They have quite happily taken the premiums for the last 15 years but the one time I need it I'm not going to get any help off them. It's disgusting that the insurance industry is allowed to do this".^[81]

As early as April 2020, an NFU Mutual customer questioned the insurer's position on business interruption in evidence to the House of Commons Treasury Select Committee.^[82]

In 2022 (following the handing down of the UK Supreme Court decision in the FCA test case), plans to bring proceedings in a group action against NFU Mutual with Penningtons Manches Cooper LLP acting as solicitors were announced.^[83]^[84] A lawyer involved said: "We expect this represents only a very small number of potentially hundreds of NFUM policyholders possibly affected".^[85] ^[86]

In a Chartered Institute of Insurance podcast at the beginning of the pandemic in May 2020, a director of the NFU Mutual, Nick Turner (at the time sales and agency director, and subsequently CEO) stated that the company would "have to work to renew trust with certain customers", but that this would be "challenging".^[87] Turner accepted that policyholders not receiving business interruption payments could impact their welfare and mental health in this same podcast,^[87] a point reiterated in commentary by Jim McLaren, as chairman, in another podcast, who said: "And you mentioned mental health and it's a crucial area and one that's often overlooked other than by those who are suffering from real mental health challenges. And again, the Mutual recognises that."^[88]

Covid-19 grants

In November 2020, following criticism in the press^[89] and campaigning,^[90]^[91] the company's conduct in deducting COVID-19 support grants from its payments triggered by COVID-19 were called into question in debate in the House of Commons with John Glen MP stating: "I am aware that NFU Mutual has continued to make such deductions. As stated in my letter, these grants are intended to provide emergency support to businesses at this time of crisis, and it is the Government's firm expectation that they are not to be deducted from business interruption insurance claims." ^[92]^[93]

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Property dealing and development

In 2021, NFU Mutual bought a unit near Milnrow for £27 million,^[94] it also committed to spending £100 million on 6 sheds near Clowes.^[95]

Also in 2021, NFU Mutual's plans to invest in a warehouse in Witney attracted over 190 objections.^[96] NFU Mutual responded saying the warehouses would create 150 jobs that will benefit the local economy and will add much-needed high-quality space to the area.^[97] In April 2022 NFU Mutual's management allocated in excess of a further £20 million of members' funds to this speculative investment with its commercial partner Tungsten.^[98]^[99]

In March 2022 plans were announced to build a speculative £34 million shed in Staffordshire.^[100] Work has since began on the shed.^[101] In April 2022, a shed was traded with Valor for £50 million.^[102]

In July 2022, NFU Mutual sold eight warehouses to American-based investment firm Barings LLC for £234m.^[103]

In October 2022, along with partners Apache, Harrison Street, NFUM obtained a loan of £70 million from Deutsche Bank to finance a £150 million build-to-rent development in Liverpool.^[104] A 325 rental-home unit neighbourhood in Liverpool was funded with NFUM capital and loans and opened in late 2022.^[105]

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Research and reports

Each year, NFU Mutual issues a Rural Crime report based on its claims data.^[106]

In October 2022 the business released research indicating their customers had "put a hold on their [investment] plans while... assessing uncertainty overshadowing" them.^[107]

Since 2016 NFU Mutual has produced an annual responsible business report to highlight support of its communities and members. ^[108]

Sky News recently reported on the impact of livestock worrying to include NFU Mutual figures and research stating that the cost of dog attacks on livestock cost £1.8m last year, up from £1.3m in 2020.^[109]

Notable people

During World War II, Arthur Scarf, an employee was awarded a posthumous Victoria Cross.^[7] A former First World War pilot, George Lindsay, was NFU Mutual General Manager between 1944 and 1955.^[7]

Lord Curry of Kirkharle, a former chairman

A former chairman of NFUM is Lord Curry of Kirkharle.^[7]

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Noteworthy court cases

In Smith (Leah) v National Farmers Union Mutual Insurance Society Limited and Robinsons Services Limited [2019] NIQB 37, the company sought to deny liability for an accident sustained in the course of an employee's attendance at work, but the court found against the company.^[110]

In 2017, Preston-based law firm Barber & Co were ordered to pay costs to NFU Mutual after the firm represented a claimant in an injury case without instruction. Barber & Co lost the case and HHJ Peter Hughes referred the case onto the Solicitors Regulation Authority, Lancashire Police and the Crown Prosecution Service for further action. The law firm claimed the case was the result of "two non-qualified fee earners creating false documentation."^[111]

In 2016 NFU Mutual sought to force a policyholder to meet a £128,000 bill for damage to a cottage from a water burst, even though she was covered by an insurance policy. The NFU Mutual lost this case in court and was also ordered by Mr Justice Holgate to pay a £100,000 legal costs bill on top of the costs of the damage.^[112]^[113]^[114]

In 2010, NFU Mutual brought an action in the High Court, making a claim against HSBC. In the case, (The National Farmers Union Mutual Insurance Society Limited v HSBC Insurance (UK) Limited [2010] EWHC 773 (Comm)) NFU Mutual had sought to require HSBC to pay a contribution to the more than £1.8 million costs of fire damage to a property that NFU Mutual was insuring for a purchaser after the exchange of contracts. NFU Mutual lost the case.^[115]