Spreading risk: Why keeping it local isn’t always better when it comes to risk


SECURA’s corporate headquarters aren’t far from its roots on a small family farm operated by the Bubolz family at the turn of the 20th Century. Our first “office” was the parlor of the family’s farmhouse, a painting of which hangs in the Home Office. It’s a powerful reminder of where we started and why we continue to focus our efforts on protecting our policyholders as a mutual company.

Since we left the farmhouse, we’ve grown and expanded to insure individuals and businesses in 12 states. Last year, we exceeded $600 million in direct written premium, a financial milestone for a company with such humble beginnings.

Why is this growth important? By gradually choosing to serve more states over the years, we’ve been able to grow our business sustainably. Another major factor — a detail that’s often overlooked by those outside the industry — is that growth in different states is a strategic approach to spread risk and strengthen our company overall.

Spreading risk geographically


Spread of risk refers to how concentrated a company’s risks are, either in terms of geographic area or type of risk. Ideally, insurers diversify risks by selling different insurance products in multiple areas to large numbers of policyholders, so the carrier can minimize the potential for all policyholders to suffer a loss at the same time.

“In insurance, we measure frequency and severity of claims, and we’ve found over the last century that, generally speaking, wind, hail, and fire are our most common and most costly claims,” said Amy DeHart, Vice President and Chief Actuary.

“That’s surprising to some,” DeHart said, “But if you think about it in terms of scale, it makes sense. When you have a windstorm that rips through the Midwest, we can have hundreds or even thousands of policyholders to make whole again.”

DeHart is an expert in analyzing risk, and she’s responsible for overseeing the company’s pricing, reserving, strategic planning, and related functions. “Generally speaking,” she said, “companies that are able to spread risk successfully experience less volatility in their operating results, which allows them to be a stable risk management partner for agents and policyholders.”

If the risks were concentrated to a smaller area, say only our home state of Wisconsin or only Farm-Ag businesses, a company would be more susceptible to catastrophic losses like a major weather event affecting the whole state.



Coming off a record-breaking storm season in 2017 and unusual spring weather in parts of the Midwest, SECURA and other insurers are keeping a close eye on the forecast. Luckily for policyholders, SECURA takes a long-term, multifaceted approach to managing the company’s risks.

“At SECURA, we don’t believe in putting all of our eggs in one basket,” said DeHart. “We maintain a strong policyholder surplus, and we leverage our relationships with our reinsurance partners, which basically provide insurance for insurance companies. With these and other measures, we can weather a heavy claims year like 2017 without jeopardizing our long-term financial stability.”

To learn more about SECURA’s financial performance and long-term stability, visit secura.net.