State Farm

Last updated

State Farm
Type Private [1]
Industry Insurance
Successor Desjardins Insurance (Canada)
FoundedJune 7, 1922;98 years ago (1922-06-07) [2]
Founder George J. Mecherle
FateCanadian operations acquired by Desjardins Insurance
Headquarters,
Number of locations
18,000 agents
343 claim offices
30 operations centers [3]
Area served
United States
Key people
Michael Tipsord (Chairman, President & CEO) [4]
Services
  • Banking
  • Insurance
  • Investing
RevenueDecrease2.svg US$79.395 billion (2019) [1]
Decrease2.svg US$5.593 billion (2019) [1]
Total assets Increase2.svg US$294.82 billion (2019) [1]
Total equity Increase2.svg US$116.23 billion (2019) [1]
Number of employees
57,672 (2019) [1]
Divisions Insurance; mutual funds; State Farm Bank
Subsidiaries see Subsidiaries below
Website www.statefarm.com

State Farm Insurance is a large group of insurance companies throughout the United States with corporate headquarters in Bloomington, Illinois.

Contents

Overview

State Farm is the largest property and casualty insurance provider in the United States. It is also the largest auto insurance provider in the United States. [5] State Farm is ranked 36th in the 2019 Fortune 500, which lists American companies by revenue. [6]

State Farm relies on exclusive agents (also known as captive agents) to sell insurance. Only State Farm agents can sell State Farm insurance, and their agents can sell only State Farm products. [7] [8]

Financial services

State Farm Insurance in Ontario. StateFarmInsuranceMarkham2.jpg
State Farm Insurance in Ontario.

State Farm has expanded into the financial services arena, such as banking and mutual funds.

The bank opened in May 1999 and is operated by State Farm Financial Services, FSB, a subsidiary of State Farm Mutual Automobile Insurance Co. These are separate from its insurance products. State Farm Bank does not have branch offices. Its regular banking services, which include checking and savings accounts, certificates of deposit, and money market accounts, are available to consumers countrywide via the Internet or over the phone, and through agents. Home mortgages are available countrywide over the phone or through agents. [9]

In the 1950s, State Farm held a contest among the agents, to come up with ideas to expand the State Farm business. Robert H. Kent, a State Farm agent in Chicago, came up with the idea of providing auto loans to existing policyholders. Robert H. Kent was friends with a local bank president at LaSalle NW, and the two teamed up to pilot the auto finance program. State Farm liked the idea so much that it was rolled out to all the agents. Robert H. Kent received royalties on the program for 20 years. This event created the first marketing partnership between insurance companies and banks.

History

State Farm Insurance "Fire Building" in downtown Bloomington, Illinois. Bloomington Il State Farm Bldg1.JPG
State Farm Insurance "Fire Building" in downtown Bloomington, Illinois.

State Farm was founded in 1922 by retired farmer George J. Mecherle as a mutual automobile insurance company owned by its policyholders. The firm specialized in auto insurance for farmers and later expanded services into other types of insurance, such as homeowners and life insurance, and then to banking and financial services.

As of December 2017, State Farm had 70,000 employees and 19,000 agents. [10] February 2014 figures show the group servicing 80 million policies in the United States and Canada, of which over 44,000,000 are for automobiles, 27,000,000 are for fire, 7,000,000 for life, and more than 2 million bank accounts.

Michael Tipsord is chairman and CEO of State Farm Mutual Automobile Insurance Company, [3] and president and chief executive officer of State Farm Fire and Casualty Company, State Farm Life Insurance Company, and other principal State Farm affiliates.[ citation needed ]

In 2014, the company sold its operations in Canada to Desjardins Group, which is continuing to use the State Farm name. [11] Canadian policies were transferred to be underwritten by Desjardins Group on January 1, 2015. The State Farm brand continued to be used for agents and marketing until 2018. [11] [12] In 2018, State Farm Canada was officially rebranded to Desjardins Insurance through Desjardins Insurance Agents. [13] The whole transition was completed in 2019. [14]

State Farm's tri-oval logo from 1953 to 2012. State-farm-logo.svg
State Farm's tri-oval logo from 1953 to 2012.

The State Farm interlocked red tri-oval logo was created in the mid-to-late 1940s and later updated in 1953. For nearly 60 years, this design was critical to its brand image.

On December 23, 2011, State Farm decided to transform its interlocked tri-oval logo to a contemporary logo to showcase the company's core service offerings of auto, fire, and life. The new logo was introduced January 1, 2012, in celebration of the company's 90th anniversary. It consists of a simple three-oval design adjacent to the State Farm wordmark. According to Pam El, marketing vice president at State Farm, a change in image was needed to employ a bolder presence that could compete in today's digital world. [15]

CEOs

CEOYears Served
George J. Mecherle 1922–1937 (14)
Raymond Mecherle 1937–1954 (16)
Adlai Rust 1954–1970 (15)
Edward B. Rust Sr. 1970–1985 (14)
Edward B. Rust Jr. 1985–2015 (29)
Michael L. Tipsord 2015–present

Subsidiaries

The State Farm booth at the Gasparilla Distance Classic Expo in 2020. State Farm booth.jpg
The State Farm booth at the Gasparilla Distance Classic Expo in 2020.

State Farm Mutual Automobile Insurance Company is the parent company of several wholly owned State Farm subsidiaries: [2]

Former

Marketing and promotions

The State Farm jingle ("Like a good neighbor, State Farm is there") was written by American singer-songwriter Barry Manilow in 1971. A cover was released by Weezer in 2011. [18] [19] State Farm's first commercial jingle was created for The Jack Benny Program in the 1960s. [20]

Advertisements

This commercial structure is from State Farm's "Get to a Better State" campaign that premiered in June 2011, with an increased spending budget. As a result, State Farm's brand awareness and favorability has gone up considerably. This campaign focuses on making humor out of unfortunate problems that are commonly faced. These commercials then make light of the situation by demonstrating how easy it is to contact an agent and correct the problem that has occurred. Each of these commercials follows a similar structure. A group of one to three people find themselves in an unfortunate situation. Someone in the group will then call on their State Farm agent by singing the jingle “like a good neighbor, State Farm is there”. A State Farm agent will then appear and help the group out with their problem. There are a few commercials that deviate from this structure, but still follow the same ultimate pattern.

Also in 2011, State Farm premiered its "State of..." advertising campaign. One notable commercial, "State of Unrest", shows a man awake at 3:00 in the morning on the phone with a State Farm representative. [21] The man's wife sees him talking on the phone in a secretive manner. She is suspicious and asks who is on the phone, to which her husband says: "It's Jake from State Farm". The man's wife then takes the phone and asks, "What are you wearing, 'Jake from State Farm?'", to which the male agent responds in a timid way, "Uh, khakis". The undaunted wife says, "She sounds hideous", and the husband replies, "Well she's a guy, so…" [22] In May 2015, a variation of "State of Unrest" premiered, starring The Coneheads from Saturday Night Live , with Dan Aykroyd and Jane Curtin reprising their respective roles as Beldar and Prymaat. This ad series later added Laraine Newman as Connie.

In late 2014, State Farm released a critically acclaimed commercial showing a man (played by Justin Bartha) who says that he will "never" do something (such as getting married, having kids, moving to the suburbs, and buying a minivan), only to do all of those. At the end of the commercial, he admits that he is "never letting go." The commercial is based on the saying "never say never" and how people say that they will "never" do something, only to do it anyway. [23]

The Hoopers is a series of State Farm commercials focusing on a family, including NBA players Chris Paul playing the father, DeAndre Jordan playing the mother, Kevin Love playing the son, Kevin Garnett playing the grandfather and Damian Lillard playing the baby. Additionally, a State Farm agent plays the role of a helpful neighbor in the set of commercials. [24]

Sponsorships

State Farm sponsored the annual Lone Star Showdown Lonestar rivalry logo 137.png
State Farm sponsored the annual Lone Star Showdown

Services

State Farm Safety Patrol – State Farm, in partnership with several U.S. highway authorities, operates a service called the State Farm Safety Patrol which provides free roadside assistance to stranded motorists on participating highways. When a driver calls the designated telephone number for the Safety Patrol, they will respond and provide the following services: fuel refills; radiator refills; engine oil refills. Most Safety Patrol personnel are also CPR and Automated External Defibrillator certified. They work to reduce accident rates, minimize the duration time of incidents, assist disabled drivers and remove road debris. Turnpikes which currently participate include, Florida's Turnpike in the State of Florida [25] and the Pennsylvania Turnpike in the Commonwealth of Pennsylvania. [26] In Ohio, State Farm–branded safety patrol vans service major highways in the Cincinnati, Toledo, Cleveland, Columbus, Dayton, Akron, and Canton areas on weekdays. [27]

State Farm won the 2020 Webby Award for Services & Utilities in the category Apps, Mobile & Voice. [28]

Controversies and criticism

Florida threatened withdrawal

In early 2009, the State Farm Florida subsidiary, the state's largest insurer, threatened to withdraw from writing property insurance business in Florida after state regulators refused to approve a 47% property rate increase. State Farm said that, in Florida, it had paid out US$1.21 in claims for every dollar in premiums since 2000. Several other home insurers have pulled out of Florida as well; many homeowners are now using the Citizens Property Insurance Corporation run by the state government. [29] State Farm has since decided to remain in Florida, although with a reduced amount of property policies. [30]

In 2010, State Farm and Renaissance jointly formed DaVinci Reinsurance Ltd. which insured more than 3.5 million homes in 2010. [31]

Criticism

A 2007 investigation by CNN reported that major car insurance companies, including State Farm and Allstate Insurance, were increasingly fighting claims of those alleging injury. Some injured parties argued these were unfair practices. State Farm and Allstate have denied these allegations. [32] This followed on the heels of criminal investigations by the states of Louisiana and Mississippi, alleging that State Farm had wrongly denied claims stemming from Hurricane Katrina. [33] Plaintiff's attorney Richard F "Dickie" Scruggs later pleaded guilty in March 2008 [34] for his role in trying to pay Judge Henry Lackey of Mississippi a US$50,000 bribe for a favorable ruling in a related case involving a US$26.5 million settlement after Hurricane Katrina. [35]

Lawsuits

In 1993, Todd Hindin filed a lawsuit against State Farm for allegedly keeping a list of prominent Jewish lawyers referred to within State Farm as the "Jewish Lawyers List". Any claims made by clients of these attorneys were automatically forwarded to State Farm's fraud unit, purely on the basis of the religion and national origin of the lawyers. These claims would then be neither settled nor paid. State Farm initially claimed that this was not a matter of discrimination, but of coincidence. However, Dr. Frank Taylor (an experienced economist on retainer for the Appellants) discovered that despite the fact that the population of the states involved had Jewish populations between 2-5% of the total population, the list was composed of nearly 80% religiously or ethnically Jewish lawyers. Individuals who had worked for State Farm, including former Divisional Claim Superintendent Ron Middler, testified that the list was indeed used to discriminate against ethnic minorities. State Farm paid out $30 million to Todd Hindin and his clients for discrimination on the basis of religion and national origin. [36]

Documents that Hindin uncovered would assist in another case in 2003, Campbell v. State Farm , in which State Farm had to pay out $145 million in punitive damages (later reduced by the U.S. Supreme Court) after acting in bad-faith. [37] State Farm had refused to pay damages to the families of two individuals who were victims in a car accident that Campbell was responsible for, despite originally informing Campbell and his family "that their assets were safe, that they had no liability for the accident, that [State Farm] would represent their interests, and that they did not need to procure separate counsel." [38]

Climate change

Under CEO Michael L. Tipsord, State Farm has announced a Green Mission to "lead by example" in environmental philanthropy. [39] [40] However, Ceres has found that State Farm invests billions of US dollars to finance fossil fuel companies. [41] Others place State Farm's fossil fuel investments at US $22.4 billion. [42] State Farm is further criticized for not considering climate change in their investments. [43]

See also

Related Research Articles

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Desjardins Group Canadian association of credit unions

The Desjardins Group is a Canadian financial services cooperative and the largest federation of credit unions in North America. It was founded in 1900 in Lévis, Quebec by Alphonse Desjardins. While its legal headquarters remains in Lévis, most of the executive management, including the CEO, is based in Montreal.

Allstate American insurance company

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American Family Insurance

American Family Insurance, also abbreviated as AmFam, is an American private mutual company that focuses on property, casualty, and auto insurance, and also offers commercial insurance, life, health, and homeowners coverage as well as investment and retirement-planning products. A Fortune 500 company, its revenues were over $9.5 billion in 2017.

Liberty Mutual

Liberty Mutual Group is an American diversified global insurer and the third-largest property and casualty insurer in the United States. It ranks 77th on the Fortune 100 list of largest corporations in the United States based on 2019 revenue. Based in Boston, Massachusetts, it employs over 45,000 people in more than 900 locations throughout the world. As of December 31, 2020, Liberty Mutual Insurance had $145.377 billion in consolidated assets, $119.420 billion in consolidated liabilities and $43.796 billion in annual consolidated revenue. The company, founded in 1912, offers a wide range of insurance products and services, including personal automobile, homeowners, workers' compensation, commercial multiple peril, commercial automobile, general liability, global specialty, group disability, fire and surety.

Markel Corporation

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Erie Insurance Group

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Firemans Fund Insurance Company Defunct insurance company based in Novato, California, United States

Fireman's Fund Insurance Company is an insurance company based in Petaluma, California which provided personal and commercial property and casualty insurance products in the United States.

Farmers Insurance Group American insurance company

Farmers Insurance Group is an American insurer group of automobiles, homes and small businesses and also provides other insurance and financial services products. Farmers Insurance has more than 48,000 exclusive and independent agents and approximately 21,000 employees. Farmers is the trade name for three reciprocal insurers, Farmers, Fire and Truck owned by their policyholders. The non-claims activities of Farmers are managed by an attorney in fact, Farmers Group Inc, which is a wholly owned subsidiary of Zurich Insurance Group.

GAINSCO is a Dallas, Texas-based holding company established in 1978 in Fort Worth, Texas by Joseph Macchia, who resigned from the enterprise in 1998 to pursue other interests.

George J. Mecherle

George Jacob "G.J." Mecherle was the founder of State Farm, headquartered in Bloomington, Illinois. Mecherle, a farmer who became an insurance agent also, founded State Farm after becoming dissatisfied with the insurance rates charged to farmers, as those rates included the risks of city drivers as well.

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Desjardins Insurance

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Desjardins General Insurance

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The Personal

The Personal Insurance Company, operating as The Personal, is a Canadian insurance company which specializes in group insurance, primarily home insurance and vehicle insurance. The Personal is a subsidiary of Desjardins General Insurance, the third largest P&C insurer in Canada.

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