State Farm Insurance Overview

State Farm Insurance

Introduction

With its corporate headquarters in Bloomington, Illinois, State Farm Insurance is a sizable group of mutual insurance businesses operating all throughout the United States.

In the US, State Farm is both the biggest provider of automobile insurance and property and casualty insurance. In the 2022 Fortune 500, which ranks American businesses by revenue, State Farm was rated number 42. It is a significant US-based conglomerate of insurance and financial services companies that was first established in 1922. State Farm Mutual Automobile Insurance Corporation, a mutual insurance firm with its headquarters in Bloomington, Illinois, is the group’s parent company. Property and casualty (P&C) insurance products are what the company is most well-known for, particularly in the personal lines market. It has insured more houses and automobiles than any other insurance firm in the US, according to SNL Financial Data.

State Farm companies and associates offer life and health insurance, annuities, mutual funds, and financial products in addition to P&C insurance. It has about 58,000 people, and 19,000 of them are independent contractors who work exclusively as State Farm agents to offer its services.

History

Customers may be familiar with State Farm thanks to its “good neighbor” tagline. This idea first emerged almost a century ago, when George Jacob “G.J.” Mecherle, a retired farmer and insurance salesman, established a single-line automobile insurance business in June, 1922 (exactly hundred years ago), with a concentrated focus on the farming sector. The company gradually extended its company performance and started offering other product lines, including homeowners’ and life insurance, followed by banking and other financial services.

George had two marriages. In 1944, when his first wife passed away, he wedded Sylvia, his second spouse. Sylvia passed away in 1965 at the age of 80. George Mecherle, when he was about 40 years old, his wife got sick. This forced him to quit farming. After giving up farming, he began selling insurance for a Bloomington-based insurance firm. At the time, he owned a farm and running this property of his made him a very creative thinker, because he was constantly seeking ways to manage his farm more effectively. When he started working as a salesman, these traits remained with him. George was a truthful, upbeat, and intelligent person. This made him share some of his strong financial ideas with his employer at the insurance company one day, the boss, in return, informed him that if he didn’t like the way things were done at the company, he could take his suggestions and start his own firm. It’s not surprising that George chose to launch his own business. In order to start his own business and sell insurance to farmers and rural car owners, he brought his original idea of offering less expensive insurance to individuals who lived outside of cities with him.

Although it today seems like simple sense, George Mecherle’s original concept of selling less expensive insurance to customers posed smaller risks and was novel and revolutionary at the time. When Mecherle delved into the insurance industry, the rest of the insurance companies did not apply this concept of changing insurance rates as a result of the gravity of the risks involved. Instead, everything was simply placed into one pool. Farmers’ and residents’ insurance became too expensive as a result. George’s point of view introduced newly unexplored ideas in insurance making his early insurance company grow as a result. He established a mutual company that initially focused on drivers in small towns and rural areas because they often had less accidents and were less expensive to cover. Because everyone shared the fundamental belief that they ought to pay less than big city rates, he was able to sell many more policies than his rivals.

State Farm launched its Fire and Casualty Company in 1935. A refurbished 1935 Mack Fire Truck from the company’s on-site museum serves as a symbol of the State Farm Fire and Casualty Company’s inception.

Mecherle grew his novel insurance business by utilizing his connections with other farmers and farm bureaus. Some of the individuals he approached with his ideas went on to work as agents, selling insurance for him. Since many of those who became agents were already members of their local farm bureaus, this gave Mecherele access to groups of farmers who needed more affordable insurance and represented the target market that he was trying to reach. Because everyone engaged was already acquainted with automobile insurance for farmers and rural residents, marketing was also made very simple. However, only Mecherle offered the more affordable insurance that made sense. Many of the original agents had other full-time occupations in addition to their part-time work. The commission was frequently lower than what other businesses paid their full-time representatives. However, due to the small number of farmers and rural people at the time, there wasn’t really a demand for full-time agents. The reduced commissions aided in cost containment, and the agent may be able to recoup part of the difference by selling more policies with the more affordable insurance. Although times and marketing have evolved, the company’s growth has been kept strong through inventive and effective marketing. State Farm, which has garnered multiple honors, is the top property and casualty insurer in the US.

About The Founder

George passed away on March 10, 1951, at the age of 73. He was born on June 7, 1877, in Merna, Illinois. The region where the business he created, Bloomington, Illinois, is where he is buried. German farmers, Mecherle’s forefathers emigrated to America and finally settled in Bloomington, Indiana. Integrity was the golden principle in the Mecherle clan. It was their responsibility to earn the respect of the neighborhood. Early on, George demonstrated that he was intelligent, self-reliant, a leader, a future baseball star, and a “doer” in everything for which he was accountable.

 He was a farmer who later went on to become an insurance agent, started State Farm as a result of his lack of satisfaction with the outrageous insurance prices that farmers had to pay because those rates also covered the dangers posed by vehicles in cities.

Subsidiaries

As said earlier in this article, State Farm Automobile Insurance is the parent company of the subdivisions below. The subsidiaries are;

-State Farm County Mutual Insurance Company of Texas

-State Farm Fire and Casualty Company

-State Farm General Insurance Company

-State Farm Life Insurance Company

-State Farm Life and Accident Assurance Company

-State Farm Florida Insurance Company

-State Farm Bank, F.S.B.

-State Farm International Service, Inc.

-State Farm Mutual Fund Trust

-Plaza One Realty Co.

-HiRoad Assurance Company

-State Farm Guaranty Insurance Company

-State Farm Specialty Insurance Company

-SF Insurance Placement Corporation of Canada

-State Farm Associate’s Funds Trust, and so many more.

Conclusion

State Farm Insurance is a multi billion-dollar company that generate $79.395 billion as at 2019. It also bagged a net income $5.59 billion, a total assets of $292.8 billion, and a collated equity of $116.2 billion, all in 2019. It has over 50,000 employees worldwide, 343 offices, thirty work centers, and about 18,000 State Farm agents. The company has a lot of key people that oversee the operations across the world, with their Chief Executive Officer and President as Michael L. Tipsord.