NFU Mutual
The National Farmers Union Mutual Insurance Society Limited (NFUM), trading as NFU Mutual, is a UK registered mutual insurance composite. It underwrites more than £1.5 billion (2018) in annual premiums in life and general insurance lines for its UK policyholders. The business is the shared property of all the members of the mutual society. The business is based in the village of Tiddington, Warwickshire. History. NFU Mutual was formed in 1910 by seven farmers in the Stratford-upon-Avon area as the Midlands Farmers Mutual Insurance Society Ltd. In 1919, it won a bid to insure the  National Farmers Union of England and Wales, established 1908. In recent years, under Lindsey Sinclare and Nick Turner as successive CEOs, the business has moved away from its rural base and moved to centralise the business: developments reputedly met with dissatisfaction among its networks of agents. In 2013 NFU Mutual cut 150 jobs. In 2015 it cut a further 85 jobs and closed two call centres. Overview. NFUM has assets under management of over £20 billion. In 2019 NFU Mutual posted a financial loss exceeding a quarter of a billion pounds for the 2018 financial year. Profits of half  a billion in 2019 were followed by reported losses of £143m for 2020. Originally providing insurance only for members of the National Farmers Union, the mutual diversified outside the farming industry during the 1980s. Now over half of the policies by number now originate outside the farming community. In 2013 anti-badger culling activists said they had hacked the company; the business denies this. Later in 2013, the NFU was placed at the bottom of a table of value produced by the Association of British Insurers for pensions annuities, with only Scottish Widows providing a poorer product, The  insurer had a customer retention rate, in 2018, of 95.5%. NFUM were rated by consumer group "Which?" as 'Insurance Provider of the Year' in 2018 and have been a "Which?" Recommended Provider for home and car insurance since they started awarding these in 2010. Personnel. Gender pay gap. 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) In 2018, the Treasury Select Committee chairwoman Nicky Morgan wrote to NFUM about its non-engagement with the Women in Finance Charter. Following this intervention, the company signed the  charter in October 2018. Controversies. COVID-19 class action and associated reputation issues. The company sold a large number of policies that covered business policyholders for various scenarios of business interruption running in to the beginning of the COVID-19 pandemic. This was litigated to some extent, though not exhaustively, in the FCA test case in 2020. From the onset of the pandemic, the NFU Mutual refused to meet any claims for COVID-19 related business interruption. It asserted that they were not obliged to pay under the terms of these policies. As early as March 2020 criticism of the business was growing  in the press: "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 [doing] this". In April 2020, the integrity of the mutual's pretences not to owe these policyhilders were questioned in evidence to the House of Commons Treasury Select Committee:, with evidence that committee received and published stating:[we now provide] evidence of how ... NFU Mutual, are viewing business interruption claims ... NFU have interpreted the appropriate clause in a way that is  more restrictive than the policy wording and denied our claim ... it has been well publicised but the purpose of this ... is to give you a further example and evidence of how an insurance company seems to be ascribing its own intentions to a policy clause rather than following the wording [in the] policy.NFU Mutual had to reverse this position for some of its policies when, in April 2020, it "identified a discrepancy" and it became unsustainable to hold the position they had not sold policies that responded, and they were required to pay policyholders of that class. On the  basis of this situation, "The Observer" identified NFU Mutual as one of the organisations offering the year's "worst customer service" after it refused to pay the owner of a holiday cottage for earnings lost due to COVID-19, despite them having cover that specifically mentioned losses due to infectious diseases. By January 2021, aggrieved members were vocally condemning the business and signalling a coordinated response to the leadership of the business's management, with one stating: "[it's] completely soul destroying. NFU Mutual needs to stand up and help their customers". Following the handing down of the UK Supreme Court  decision in the FCA test case members of the Mutual and their lawyers have come to the view that a proper construction of other policies the NFU Mutual had declined for two years was wrong in law, and these policies should have responded and the NFU Mutual has been wrong to claim that they escape liability to pay claims. Consequently, in January 2022, it was announced that a group action, headed by Penningtons Manches Cooper LLP, was underway to address this contended breach of contract. This action has recently received support for its analysis in "Corbin & King v Axa", CL-2021 -000235. Each member of the group action would be, on success, entitled to up to £50,000 per policy, and there are thought to be thousands of policies sold, suggesting the scale of this action could be very significant with a lawyer involved saying: "We expect this represents only a very small number of potentially hundreds of NFUM policyholders possibly affected". This contingent liability was not admitted in the accounts signed in 2020 or 2021, though the FCA Test case was before the court for some of this period, and the appropriateness of the executives and directors withholding explicit discussion  of this exposure as potentially misleading was openly questoned in the AGMs for 2020 and 2021. Commenting on this situation an impacted policyholder said:[i]n good faith, we paid our premiums to NFU Mutual for years to protect us ... we reached for the comfort and the security of the longstanding relationship with NFU Mutual and it turned to total ash. Discussing this situation in a Chartered Institute of Insurance podcast in May 2020, a director of the NFU Mutual, Nick Turner (at the time sales and agency director, and subsequently CEO) stated that:Trust is important everywhere in insurance ... We have  a product which is a promise essentially ... I have written little essays about this that "so many" have found helpful ... So many people's lives and businesses have been affected in tragic and possibly permanent ways [by failures of business interruption insurance to respond] ... If you haven't written a policy wording very precisely to protect the insurance company and bring clarity to the consumer, then that is where the problems lie ... We [will] have to work to renew trust with certain customers [who feel they have been let down], it will be challenging this is going to run and  run ... if [the issues around policies we have sold have put policyholders] into incredibly difficult positions or even administration, nothing is going to put a smile on [their] face ...Turner added that he thought putting policyholders in this situation was likely to have harmed their welfare and mental health. Business ethics. Misappropriating taxpayer money. In November 2020, following criticism in the press and campaigning, the ethics of the company's conduct in deducting COVID-19 support grants from its contractually obligated payments triggered by COVID-19 were called in to question in debate in the House of Commons between Ben Lake MP  and John Glen MP as HM Treasury minister, with the minister 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. ... The FCA [Financial Conduct Authority] has also made it clear that it may intervene and take further actions where firms do not appear to be meeting the FCA's expectations and treating their customers fairlyThe NFU  Mutual was required to reverse this position two months later. A professional association of the impacted businesses commented on this situation on behalf of impacted business saying: [this is] threatening our long-term sustainability, and taking taxpayers' money designed to keep us afloat. ... devastating. Many are now reluctant to make a claim, even though they are rightfully entitled, having paid their premium. We expect insurance companies to honour their contracts and not behave so poorly. Unfair policies. In 2016, criticism in the press attached to the mutual over customers having claims rejected because of exclusions buried in the small print : "in some cases, policies would not pay out if you lost 'only' one limb, specifying that you must have had a double amputation to be deemed in a bad enough state a claim." Executive pay. The pay of senior executives out of mutual funds has attracted criticism. Most recently, concerns were renewed in 2019 at the £2 million pay of the CEO Lindsey Sinclair. Prior to this the issue received negative attention in 2011, with the "Insurance Times" quoting an observer as saying: "Only two words come to mind – and they are 'snout' and 'trough'." Climate change. In 2020 , Ethical Consumer returned a "worst" verdict on NFU Mutual in a study examining it against environmental and carbon assessment criteria, including commitments to fossil-free investing, having targets in line with international climate agreements and visible public policies that report on emissions from investments, and further criticized them for "just talking about the climate impact of their offices" rather than the far more significant impact of their investments. Two years later they announced a carbon reduction strategy. Frauds. Against the mutual by its staff. In 2011, an employee of NFU Mutual insurance, Gordon Murray, was jailed for a £400,000  fraud. In 2018, Iain Wishlade, an NFU Mutual employee was also jailed for a £129,000 fraud. Against the mutual by its members/policyholders. In 2017 a Cardiff based veterinary surgeon engaged in making fraudulent claims concerning her horse and was struck off from her professional register. In 2019 a member of the NFU Mutual was jailed for 20 years following a fraud in which they had arranged an explosion which injured 81 people. Discrimination. Disability discrimination. In February 2022, a former member of the mutual stated in public that the Financial Ombudsman Service had confirmed that, in Spring 2021 , then Chief Executive had expelled him and his family for raising issues of experience of disability discrimination from the NFU Mutual. That former member added that the output of this discrimination which included making files in a hostile fashion, was that they were unable to buy any other insurance fairly and experienced a £14,000 fine for having a disability and asking the mutual to treat them fairly. Employment discrimination. In 2018, adverse comments about policies of discrimination against some customers were made. Customers wrongly pursued. In 2016 NFU Mutual sought to force 56 year old Miss Govina to pay  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. In 2019, errors by NFU Mutual, in failing to properly record insurance a customer had taken out, resulted in a customer having a £200,000 car seized and their customer facing criminal charges. Demutualisation. Around the year 2000, a number of attempts were made to privatise  the NFU Mutual. Former NFU Mutual director John Murray initially approached the five venture capitalists in the hope of launching a bid. One of the reasons this was advanced the opinion that the company was "eroding its value by selling insurance to non-farming customers at knockdown rates"; at the time, windfalls for members of between £20,000 and £25,000 were anticipated. Commenting to the House of Commons Treasury Select Committee 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. Property dealing and development. In 2021, NFU Mutual bought a shed near Milnrow for £27 million, it also committed to spending £100 million on 6 sheds near Clowes. Also in 2021, NFU Mutual's plans to develop a giant warehouse 14 metres from one residential properties in Witney, with trucks coming and going at all times of night were branded "completely unacceptable" by residents and attracted over 190 objections. Nevertheless, 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. In March 2022 plans were announced to build a speculative shed in Staffordshire. In April, 2022, a shed was traded with Valor for £50 million. Membership. Under NFU Mutual's Articles of Association, each policy generates a distinct right to speak and vote at the AGM, scrutinise the accounts, and hold the management to account, as well as a ownership right in the business. There are around 900,000 members of the NFU Mutual . 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". As NFU Mutual has no shareholders, it states that 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 claimed discount of between 10% and 15% (2021/2022) is currently how this is articulated on NFUM materials, which style this the "Mutual Bonus". Products. The business offers personal lines products such as home, private motor, pet and  travel insurance. They offer agricultural and commercial insurance to businesses customers of various sizes. Diverse life insurance products including term assurance are offered to the market by NFUM working with AIG. The company offers various investment and pension products and sells financial advice. HQ building. The head offices are at Tiddington. The 1984 building was designed by David Lloyd Jones for RMJM. Faced in Bath stone, it was one of the first to be designed around environmental sustainability. Court cases. Section::::"NFU Mutual v HSBC". In 2010, the 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  EWHC 773 (Comm)) the NFU Mutual had sought to require HSBC to pay a contribution to the more than £1.8 costs of fire damage to a property that NFU Mutual was insuring for a purchaser after the exchange of contracts. The NFU Mutual lost the case. Section::::"Smith v NFU Mutual". In "Smith (Leah) v National Farmers Union Mutual Insurance Society Limited and Robinsons Services Limited"  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. Affiliates and agents. NFU Mutual sells policies predominantly through a network of agents, located mainly in rural areas. At the end of 2018, NFU Mutual had over 3,800 employees, and 654 agents working out of 310 offices. Agents are all are tied to NFU Mutual products. A subsidiary, Avon Insurance, was established in 1925 to provide insurance to non-farming customers, and later specialised in personal accident insurance. Avon closed to new business in 2013. NFU Mutual acquired the Islands Insurance Group in 1987, providing access  to NFU Mutual products for customers in the Channel Islands. NFU Mutual Direct was set up in 1996 to provide telephone and internet call centre services. Corporate social responsibility. The business set up the Farm Safety Foundation in 2014 to address safety/mental health issues specific to agriculture. In 1998, NFU Mutual established the NFU Mutual Charitable Trust. This independent charity makes grants to established charities working in agriculture, rural development and insurance. In the 24 years the independent charity has distributed funds averaging around £250,000 per year. In 2022 the NFUM Charitable Trust pledged £150,000 to Disasters  Emergency Committee's Ukraine Appeal.