Which Is the Biggest Car Insurance Company?
Insurers compete against one another to gain and maintain the largest amount of policyholders — after all, the more customers, the more revenue — but which can claim the title of being the largest auto insurance provider? According to a study from OnlineAutoInsurance.com based on data released by the National Association of Insurance Commissioners, for the past four years (2009-2012), State Farm has been the insurer with the biggest share of the auto insurance market.
The four next-largest auto insurers are Allstate, Berkshire Hathaway (owner of GEICO), Progressive, and Zurich Insurance Group (owner of companies like Farmers and 21st Century). The top five rankings remained the same between 2009 and 2012.
State Farm has a huge lead on its competitors. In fact, if you combined the business of the No. 2 and No. 3 insurers — Allstate and GEICO — in 2010, the total amount of premiums would have still been just slightly smaller than State Farm's.
State Farm’s Market ShareFrom 2009 through 2012, State Farm had a total market share of over 18 percent with over $30 billion in written premiums in each of those years. During that time, State Farm increased its business by an average of 1.5 percent per year.
|Year||Market Share||Direct Premiums Written|
Analysts spent most of 2013 analyzing the tight race between GEICO and Allstate, focusing on SNL Financial data that has seen the two insurers trading the second- and third-highest spots in quarterly car insurance premiums that year. However, State Farm is rarely in that media spotlight because they’ve maintained a wide lead on all competitors.
State Farm Company History Holds Interesting FactsIn 1922, a retired farmer and insurance salesman by the name of George Jacob “G.J.” Mecherle founded State Farm in Bloomington, Ill. Mecherle sold his first auto policy to a local farmer named Henry Stubblefield, insuring his 1919 Hudson for a semi-annual premium of $11.17.
The company’s hold on the top spot isn’t news. State Farm claimed the title of top auto insurer in 1942 and has been the industry leader ever since. With runner-up Allstate claiming just a hair over 10 percent of the market and almost half of State Farm's written premiums, it looks as though State Farm’s ranking at the top isn’t going to change any time soon.
On top of being a successful car insurer, the company began insuring homes in 1955, and within a decade it became the top homeowners policy provider. In 2012, it held the top spot with over $16 billion in direct premiums written and 20.74 percent of the market share. Allstate was in second place for market share in this category with 9.12 percent and a little over $7 billion in direct premiums written.
In 1964, State Farm earned the right to call itself the largest insurance writer in the world.
State Farm has been a family business under the Rust name since 1954 when Adlai Rust, , as the insurer’s general counsel in 1922, took over leadership of State Farm. Since then, a member of the Rust Family has headed the company as chief executive officer (CEO); the current CEO is Ed Rust Jr., who was elected president and CEO in 1985 and chairman of the board in 1987.
If it’s that rich history that’s helped State Farm climb to the top of the heap of U.S. car insurers, it may be their clever advertising that’s helped the “good neighbor” keep its place on top.
In 1971, Barry Manilow wrote the music for the “Like a good neighbor, State Farm is there” jingle. You can hear him sing it here.
These days, that advertising train is still chugging along, bringing aboard the likes of celebrities from Chris Paul to Aaron Rodgers to Scooby Doo for media campaigns that we’ve all seen on television and during football games and movie theater previews.
And having a firm set of happy customers helps State Farm preserve its sound book of business. State Farm is different from the other largest auto insurers in that it's a mutual insurance company. That means shares of the company are not traded publicly on the stock market. Instead, the insurer is technically owned by its policyholders. So instead of paying dividends to investors when the company has a higher-than-expected profit, those dividends go to policyholders.
Much More than Just Auto InsuranceThe company has shown that it values education. In 1962, it pioneered the good student discount, which rewards students who maintain good grades in school with auto insurance savings. In 1963, the State Farm Companies Foundation was established to provide funding to national scholarship programs.
Additionally, the company has provided grant and loan support to the Local Initiative Support Corporation (LISC), which is a national organization that aims to help residents of a community turn distressed neighborhoods into sustainable communities. These are just a couple of examples of the community involvement the company has in its history.
Though State Farm may have started with a single auto policy sold in 1922, the company has become much more than that and offers a wide range of insurance products that include:
- Condo Owners
- Long-Term Care
Financial Strength and Customer SatisfactionA.M. Best, a financial rating company, has assigned State Farm an A++ (Superior) financial strength rating. This is the highest rating a company can receive from A.M. Best.
According to the J.D. Power and Associates 2013 U.S. Auto Insurance Study, State Farm ranked highly in customer satisfaction and was noted for high-ranking customer satisfaction in all of the study's 11 regions except for the northwestern U.S.