Our values will guide us. Eric Madalene September 27, at PM. Newer Post Home. Subscribe to: Post Comments Atom. State Farm was founded in by a retired farmer and insurance salesman, George Jacob "G. What started as a single line auto insurance company, has now grown to an entity offering nearly products and services to help customers manage today and prepare for tomorrow. Currently, the company handles nearly 35, claims per day, which demonstrates its level of commitment to policyholders.
State Farm offers access online and offline through statefarm. We are people who make it our business to be like a good neighbor; who built a premier company by selling and keeping promises through our marketing partnership; who bring diverse talents and experiences to our work of serving the State Farm customer. Our success is built on a foundation of shared values — quality service and relationships, mutual trust, integrity and financial strength.
Our vision for the future. Get Access. Read More. The First Mutual Insurance Company Words 5 Pages Benjamin Franklin helped to establish in , what it would be the first mutual insurance company. Popular Essays. Free Will. Through a network of over 16, agents, the company and its subsidiaries handle 71 million auto, home, life, and health insurance policies. The State Farm group also offers its customers mutual funds and a variety of banking services, including deposit accounts, CDs, and mortgages via the Internet and telephone.
State Farm began in as one man's plan to offer low-cost automobile insurance to the farmers of Illinois: hence the name State Farm Mutual Automobile Insurance Company. State Farm's early success and strong standing in a volatile marketplace is surely due to the vision of the company's founder, George Mecherle. Mercherle's beginnings are as modest as the company's success is extraordinary. He was a farmer until he was 40, when his wife's failing health forced them to leave their farm and Mecherle started selling insurance with a Bloomington, Illinois, company.
Running his own farm had shaped Mecherle into a man who was constantly looking to innovate and improve conditions. When, in his characteristic outspoken, straightforward manner, he told his boss at the insurance company some of his ideas for improving the business, the boss said, "Well George, if you don't like the way we run things, go start your own company. Mecherle did just that. He brought to the auto insurance business a fresh perspective and, with the help of a few choice people, began instituting his own ideas, which began with establishing a mutual automobile insurance company.
Unlike a capital stock company, which distributes dividends, a mutual company adjusts premium costs and will refund a portion of the company's surplus to policyholders during periods when claims are lower and income higher.
At the time, the insurance industry set its own rates and did not distinguish between groups of drivers based on location, driving record, or any other risk criteria. Mecherle decided it was possible to form a mutual insurance company that catered to rural and small town drivers who, as a group, had fewer accidents and cost insurers less in claim payments.
Because claim costs for this group tended to be lower, premiums could be lower, and State Farm undercut its competitor's rates significantly. This innovation of tying insurance rates to risk level established State Farm's legacy as a smart insurer that passed savings on to the customer. State Farm was also a pioneer in the practice of charging its customers an initial lifetime membership fee to cover the cost of processing new policyholders and the agent's commission.
This one-time, nonrefundable fee allowed State Farm to keep the policy premium low, and it generated essential income that fueled the company's early growth. Aside from its independent approach to rates, another key element in State Farm's success was its unique agent force. Normally, insurance agents represented a number of different companies, took large commissions, and shouldered a great deal of the paperwork involved in writing and maintaining policies.
Mecherle simply tapped into the network of farmer's mutual insurance companies formed to protect members against fire or lightning damage, as well as farm bureaus and other local institutions established throughout various regions.
His first agents were men who were well placed in the community, such as the officials from the local farm bureau or sometimes an area's school principal. These agents worked part-time for State Farm and received less commission than their counterparts selling insurance full-time for other insurance companies. Nevertheless, by selling a sound, affordable insurance package to a population that needed it, State Farm agents were able to make their money on sales volume. Furthermore, State Farm's central office in Bloomington handled most of the paperwork, which freed up its agents to spend the bulk of their time selling.
The strategy worked so well that State Farm outgrew its offices three times in the first seven years. The home-office staff grew from five people in to in The company reached a point in the early s where its operations had become so scattered, some employees wore roller skates to speed delivery of interoffice mail. The beauty of many of State Farm's policies was that they benefited both company and customer.
For instance, State Farm followed other companies in offering semiannual--and later monthly--policy payments, which customers found easier to pay and, at the same time, led to accounting advantages for State Farm.
State Farm also streamlined operations from the start, simply collecting premiums for a renewed policy on a vehicle, whereas most automobile insurers rewrote the policy each year. Before long, the company was turning away unsolicited applications for insurance that were coming from prospective customers in urban areas.
However, because the company lacked economy of scale, it was soon absorbed by State Farm Mutual, which rewrote its bylaws to allow for the extension of services to those urban customers not originally eligible for State Farm insurance. In , just six years after the company's founder told a banker in Bloomington, "I've never had an account here. I've never cashed a check here, as far as I know. I've never tried to borrow your money.
In , the company moved into its own eight-story building, to which it added five floors in In , State Farm built another eight-story building next door, to which it also added five floors in In the early s, the company built its present headquarters at a site on the eastern edge of Bloomington. The company's growth was not just a matter of volume; State Farm continually expanded the services it offered. In January , the company formed a subsidiary, State Farm Life Insurance Company, which, like its parent company, has flourished.
During the banking holiday that brought in the New Deal era, State Farm Mutual operated at a loss, but it continued to operate at a time when many insurance companies folded. The National Recovery Act eliminated discounts on auto parts, and increased wages under this act sent repair costs higher. State Farm tightened in its belt, dropped coverage in its highest risk areas, and continued to attract and satisfy customers. In , it diversified again with the formation of the subsidiary State Farm Fire Insurance Company, which in merged with State Farm Casualty Insurance Company to form State Farm Fire and Casualty Company, which quickly became the largest insurer of homes and pleasure boats in the nation.
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