| State Farm Insurance | One State Farm Plaza, Bloomington, IL 61710-0001 |
| www.statefarm.com | (309) 766-2311 Fax: (309) 766-3621 |
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America's largest car insurer
Have a fender bender anywhere in the U.S., and there's a one in five chance you'll be begrudgingly exchanging insurance info with a State Farm policy holder. The largest insurer of automobiles, homes, and pleasure boats in the U.S., State Farm is also well-known for its life, health, and property insurance coverage plans. Based in Bloomington, Illinois, State Farm employs 76,500 people and over 16,500 agents; it manages no fewer than 66.2 million policies.
History: ups and downs
State Farm was founded in 1922 by George Mecherle, a retired farmer who in the words of company literature "believed that farmers should pay less for insurance because they drove less and had fewer losses than folks living in cities." Early in its history, the company innovated with simplified billing systems and six month premiums that eased the burden on agents and policy holders alike. State Farm also introduced preventative policies such as its Good Student policy in 1964; it remains an active supporter of Mothers and Students against Drunk Driving. The 1990s, however, brought some trouble for State Farm. In 1996, the company invoked the ire of the State of Florida by canceling 62,500 homeowners' policies in hurricane-prone South Florida. The state retaliated by withdrawing an approved premium hike. The following year, the company settled an embarrassing lawsuit alleging that the company had faked policyholders signatures on forms declining coverage.
Jumping on the financial services bandwagon
The financial services industry continues to consolidate, and State Farm isn't immune to the trend. In November 1998, the U.S. Office of Thrift Supervision granted State Farm a federal thrift charter, allowing the company to take in deposits, make loans, and provide a range of other kinds of banking activities by means of the company's 16,500 agents. After opening to its own employees in March 1999 and to customers in Central Illinois and St. Louis two months later, State Farm Bank became available via the Internet and telephone to State Farm clients across the country in March 2000. Anyone can open accounts, view statements, transfer money, and pay bills from the company's web site. While the move promises to make State Farm a power in financial services, a spokesperson for the company told Newsday: "We are looking at this primarily as a retention tool for our best customers."
Beginner banker?
Retention or no, some industry observers have their doubts about the development. One commentator for The Chicago Tribune, for example, pointed out that "State Farm has no banking background," and questioned the legal and ethical implications of mixing banking and insurance functions. Other critics point out that State Farm will escape federal banking laws regarding community investment, and will neglect low and moderate income neighborhoods. State Farm counters with promises to immediately commit $195 million in loans available to low and moderate income borrowers, and in the future to make such loans available in amounts equal to 5 percent of the thrift's assets.
Tinkering with commissions
In another move geared toward retaining customers, State Farm has introduced a new commission system for its agents. Under the new system, the company will cut base pay and replace large upfront commissions with a set of bonuses for agents who maintain long-term customer ties. While the move promises to lower costs, many agents have resisted. One group, The National Association of State Farm Agents, characterized the plan as "financially devastating to most agents," and demanded that the company buy out its 3000 members' businesses and provide payouts of 10% of income for every year worked. State Farm rejected the demand in May 1998.
More legal woes
The company's "good neighbor" image has been hurt by a host of legal problems. In October 1999, a group of former State Farm agents held a news conference and signed a letter to Congress charging that the company engages in many consumer frauds and secretly curtails the sale of property insurance in areas that are prone to storms and other disasters. Some of the other abuses the company was accused of included the fraudulent use of medical utilization review companies designed to lower payments to victims in auto accidents and overcharging on homeowner policies. The company emphatically denies the group's charges. In another scandal, a class-action suit was filed against State Farm for its practice of insisting on the use of cheaper (and sometimes inferior) replacement parts after car accidents. In October 1999 a jury awarded policyholders $1.18 billion, the largest judgment ever against an insurance company. State Farm appealed the decision. And in another blow to the company's image, in June 2000 California State Senate leaders released state reports showing that State Farm had mishandled hundreds of claims following the Northridge earthquake.
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State Farm's Web site, www.statefarm.com, provides an online resume builder, and lists descriptions of company departments and announcements of job fairs and career opportunities. Our insiders indicate that State Farm relies heavily on referrals; but in the words of one informant: "State Farm hires people from just about every means available."
Regarding the interview process, our insiders indicate that the process is generally relaxed, with interviewers avoiding "dumb questions just to see what [you] would do when caught off guard." Nevertheless, contacts indicate that candidates can expect to speak with several different interviewers. One recounts spending an entire day interviewing.
As far as tips for the process, one State Farmer advises: "One thing you want to be prepared for is to have specific examples of educational or work experiences that relate directly to the job you're applying for. It could be projects you've worked on, or just the fact that you've shown yourself dependable with responsibilities assigned to you."
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Loving the Farm
Our contacts give glowing reviews to State Farm. "State Farm is a great place to work," says one. Another agrees that "it's a fantastic company to work for." "Life at the Farm is just grand," beams a particularly happy insider. Another long-term State Farmer tells us: "I've been an agent for 18 years, and have really enjoyed it."
Go-getters and schmoozers welcome
One explanation for such prolific praise is the abundance of opportunity for those with State Farm-style gumption. One insider raves about "lots of opportunities for advancement (with a little hard work)." Another tells us that "if you're a go-getter, you should have plenty of opportunity to advance to a fairly high level." The same contact gives some advice on advancement: "You should become involved in extracurricular activities so that you can get acquainted with as many State Farmers as you can. Some activities might be different sports organized by the activities organization. [You can also join] Toastmasters, which develops your public speaking skills, or one of the many clubs."
An evolving company
From the comments of our contacts, State Farm doesn't seem to be a static company. For example, regarding dress, one source tells us: "State farm also allows casual business dress now, something five years ago I would never have dreamed they would do." On the topic of pay, our informants express some uncertainty, but note that "if you work hard, you should be rewarded quite well." Finally, diversity seems to be changing at State Farm, with ratios of women and members of minority groups "constantly increasing at the upper management levels."
Flexible schedules
While State Farm may change its tune as it continues its foray into financial services, our insiders indicate that the company provides flexible scheduling. One insider tells us that "every three months you can choose to change your hours." One choice available is the option of working four ten hour days with a three day weekend. The flexible hours correspond with State Farm's comprehensive benefits packages, detailed at www.statefarm.com.
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Arlene Hogan
Human Resources
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Automobile Insurance;Health Insurance;Homeowners Insurance;Life Insurance;Financial Services
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