Being There. The Legacy of State Farm

State Farm. The nation’s insurance leader. But a company founded on very humble beginnings.

The origins, of course, were with G.J. Mecherle, the founder of the company…he didn’t think it was fair that he and his fellow farmers and families in rural communities paid the same auto insurance rates as those in Chicago.

The idea was an honest insurance company that provided rates related to the risk…(and were)…responsible stewards of the money the policyholders provide us in premiums.

State Farm was founded in 1922, in the small farming town of Bloomington, Illinois.

Just days after the company opened its doors, a new policyholder collided with another vehicle. State farm had its first claim.

And along with it, the opportunity to deliver on the company’s fundamental promise: to be there when the unexpected happens. And so it did, paying the claim the very next day, and earning a lifelong customer.

That first transaction – demonstrating State Farm’s commitment to protection and quality service – and the millions that followed have earned State Farm the title of the nation’s No. 1 auto and home insurer.

With more than 84,000 agents and employees, the company serves over 80 million policies in the U.S and Canada today.

This Fortune 100 Company has come a long way since a handful of part time agents espoused the principal of fairness to Illinois farmers. “Squaredealing” is what G.J. called it.

As State Farm’s reputation as an honest, fair company spread, business grew quickly.

Customers demanded more products and services. State Farm responded, adding life insurance, fire and Casualty and later homeowners insurance to its family of products.

In the late 90s the company expanded into financial services, offering mutual funds and opening State Farm Bank.

One of the company’s defining moments came in 1942. State Farm earned the rank of the No. 1 auto insurer in the United States. A title it has proudly held ever since. State Farm is also the country’s largest insurer of homes since the early 1960s.

We are a success story that’s unparalleled. We built a company of this size one policy at a time. Sold by a State Farm agent and their staff. To have done that essentially from organic growth is really quite astonishing.

The company founder’s decision – to establish State Farm as a mutual company –is one of its defining characteristics. State Farm is not publicly traded, so there are no stockholders whose investment interests must be considered. Instead State Farm has an undivided interest in the well being of its policyholders.

The mutual company structure allows you not to get caught up in what you find with Wall Street and publicly-traded companies of quarterly, short-term focus. It allows you to look at what needs to be done and try to accomplish that in a responsible period of time without a lot of noise from the investment community.

And as a mutual company, State Farm doesn’t sell stocks to raise capital. The company has had to rely on its own resources, and prudent use of them. It’s that conservative nature that’s enabled the company to successfully navigate through depressions, wars, natural disasters, and most recently, the 2009 recession.

…It is very much the long-term orientation that State Farm’s managers have taken. They want to be here, not only for tomorrow, but for the next decade and generation. And they’ve managed the company well to see that that comes true.

I used to say to our senior executives…“What decision could we make that would be in the absolute best interest of our policyholders, now and long-term?” And if it didn’t work out best for the policyholder, then we wouldn’t do it.