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Wenqi Gu, Hui Cao, Mengdi Wu, Yijia Liu, Yiya Zou, Jin Wang, Zijun Zhang, Huan Huang
Agenda
1• Company overview
2• Insurance products
3• SWOT analysis
4• Regulation
State Farm Jingle
American songwriter Barry Manilow in 1971
Company history
Founded in 1922, by retired farmer and insurance salesman George Jacob "G.J." Mecherle
Headquartered in Bloomington, IllinoisU.S and CanadaOriginally specialized in auto insurance
for farmersLater expanded its services into other
types of insurance, such as homeowners and life insurance
Company history
Currently ranked number 41 on the Fortune 500 list
#1 auto insurer in the U.S. since 1942. Insure more cars and homes than any other insurer in the U.S.
Company history
18,000 State Farm agents serve 82 million policies and accounts
Handle nearly 35,000 claims per dayNearly 100 products and services, in 5
different lines of business, to help customers manage today and prepare for tomorrow
➢Auto➢Motorcycles➢Sport & Leisure Vehicles
Vehicles Insurance
Auto➢ Liability Coverage: pay damages due to bodily injury and
property damages to others for which you are responsible. ➢ Medical Payments Coverage: pay reasonable and necessary
medical and funeral expenses for covered persons.➢ Collision Coverage: pay for damage to a covered vehicle
caused by collisions and a vehicle rollover➢ Comprehensive Coverage: pay for loss of or damage to an
insured vehicle, not caused by a collision or vehicle rollover: fire, flood. etc.
Auto➢ Uninsured Motor Vehicle Coverage: pay for damages when you
are injured in a car accident caused by another person who does not have sufficient liability insurance.
➢ Underinsured Motor Vehicle Coverage: pay for damages when you are injured in a car accident caused by another person who does not have sufficient liability insurance.
➢ Car Rental and Travel Expenses Coverage: pay the cost of renting a replacement vehicle so you don't have to interrupt your daily routine.
➢ Emergency Road Service: Emergency Road Service provides services such as towing your vehicle to a repair facility, delivery of gas or oil, and assistance with changing a tire, etc.
Motor➢ Similar to auto
Sport & Leisure Vehicles—Boat
➢Risk Coverage: Sinking, Fire, Storms, Theft ➢Property Coverage: Equipment permanently attached to the boat, Anchors, Tools etc. ➢Boat Liability Insurance Coverage: Boat insurance can also protect you if you injure someone with your boat or damage their property.
Home & Property Insurance
Homewowners
Condo unitowners
Manufactured homeowners
Renters
Protect the Place You Love to Call Home
Homeowners Insurance Covers:
(Examples not limited to ) Fire or Lightning Windstorm or Hail Freezing of plumbing system Theft Homeowners Insurance Doesn't Cover: Bodily injury or property damage that is expected or intended by the
insured Business pursuits Professional services provided or not provided Ownership, operation, use, or maintenance of aircraft, motor vehicles, and
certain watercraft
State Farm policyholders can even take advantage of special offers on home monitoring systems — a smart way to save money and help monitor your home.
Care
Fire
CrimeWater
Understanding the Value of Your House
Market Value
OR
Replacement Cost
Why State Farm homeowner insurance?
State Farm can help you save on homeowners insurance by offering discounts for:
A claim-free history Purchasing multiple State Farm products: Multiple Line Discounts
Home security devices: Home Alert Discounts
Utilities ratings plans Certain roofing materials: Roofing Discounts
Fire Sprinklers
Residents of Florida and Louisiana can download documents for hurricane loss prevention discount programs in their state.
Florida and Louisiana Hurricane Program
Protection and Value — That's Renters Insurance
The landlord of your apartment has insurance, but it probably only covers the building where you live — not your belongings or your liability for accidents.
Liability Insuance
➢Business & Professionals➢Personal Umbrella Policy
Liability InsuanceBusiness & Professionals
➢help protect your organization from costly legal judgments, settlements, and defense fees
➢Contractors➢Personal services➢Offices➢Medical offices➢Retail shops➢Food shops➢Other organizations
Liability InsuanceBusiness & Professionals
➢Contractors
Liability InsuanceBusiness & Professionals
Title Protect Against Note
Property buildings and other structures, landscaping, and
equipment
accidental direct physical loss
Comprehensive General Liability
claims and lawsuits
Completed Operations bodily injury and property damage
claims
after a construction or
service project is completed
Inland Marine covered property you own or are responsible for
Damage or loss
Liability Insuance
➢Business & Professionals➢Personal Umbrella Policy
➢You're facing a claim for damages because of an accident that resulted in injuries to someone or a loss to their property.
Liability InsuancePersonal Umbrella Policy
➢ExamplesAutoHome
Liability InsuancePersonal Umbrella Policy
Identity Theft Insurance
➢Protect You from the Cost of Fraud➢The Federal Trade Commission estimates that
as many as nine million Americans have their identities stolen each year.
Identity Theft Insurance
➢Restoration Services➢Fraud Reimbursement
➢If you become a victim of identity fraud, the company will assign a case manager to coach you through the complicated identity recovery process. For up to 12 months, your case manager will work with you to recover control of your identity and help you restore your credit history.
Identity Theft InsuanceRestoration Service
Identity Theft Insurance
➢Restoration Services➢Fraud Reimbursement
➢ If you become a victim of identity fraud, StateFarm will reimburse you up to $25,000 for covered expenses, including:
➢ Cost of obtaining credit bureau reports➢ Fees when reapplying for loans initially declined due to
falsified credit information➢ Attorney fees for defending criminal and civil suits or
representation at a government audit➢ Notary and filing fees for costs incurred to correct your
identity and credit records➢ Postage and phone costs
Identity Theft InsuanceFraud Reimbursement
➢Personal Tailor➢insurance and benefits package
Small Business Insurance
StateFarm Life Insurance
Term life Whole life
Universal life Variable insurance
State Farm Life Ins Co’s direct premium is 126,216,972, the market share is 7.46%, which is in top 3 in all insurance companies of America
Glance of all life insurance Term Life Whole Life Universal Life
Characteristic Affordable,no cash value,insurance over a specified term
Protects insured until death. Premiums guaranteed to remain level.Cash Value
Flexibility-clients decide the amount of life insurance and premium payments subject to policy minimums.
Available policy TERM:10,20,30Return of the premium 20,30
Term: Whole lifeLimited pay 10,15,20 single premium life
Flexible, based on personal objectives
Investment and return
➢1. Term life: small cost, big protection.
10 years: starting at $15.23/month, 20 years : starting at $15.75/month, 30 years: starting at $20.23. ($250,000 of coverage for three options!)
➢2. Whole life: level premiums and lifelong protection Starting at $78.13/month, $898 annually, $100,000 of coverage
➢3.Universal life: Flexible and permanent protection Customers decide the amount of life insurance and premium payments subject to policy minimums.
Health Insurance
➢ Definition: a type of insurance that is against the risk of
incurring medical expenses among individuals.
➢ Target Customer: people who do not have this kind of
coverage from their employers and want to protect them and
their families.
➢ Types: 6 general types.
Health Insurance
Types of Health
Insurance
Individual Medical
Medicare Supplemental
Medicare Part C
&Part D
Dental Insurance
Supplemental Insurance
Short Term Insurance
Disability Insurance
➢ Definition: a form of insurance that insures the beneficiary's
earned income against the risk that a disability creates a
barrier for a worker to complete the core functions of their
work.
➢ Target Customer: people engaged in dangerous occupations.
➢ Types: 3 types
Disability Insurance
Disabilit
y Income
• This plan is designed to help keep you financially stable during difficult times by paying a monthly income, directly to you, when you are sick or hurt and unable to work.
Mortgage
• This affordable plan protects your home by providing funds to help meet your mortgage loan responsibilities should you become totally disabled.
Individu
al Cred
it
• This plan is designed to help those who have a loan payment in equal monthly installments. It can pay a monthly benefit directly to your financing institution should you become totally disabled.
Long Term Care Insurance
➢ Definition: an insurance product helps provide for the cost of
long-term care beyond a predetermined period.
➢ Target Customer: people who are unable to perform the basic
activities of daily living, such as dressing, bathing, eating,
toileting, and walking.
SWOT analysis-Strengths
➢Strong Position in US Market
Source: National Association of Insurance Commissioners
over 17,000 licensed agents nationwide
SWOT analysis-Strengths
➢Brand Recognition and Customer Loyalty
Source: Customer Satisfaction survey from Insure.com
SWOT analysis-Strengths
➢High Ratings
A.M. Best's A++ (superior)
Standard & Poor's AA (excellent)
SWOT analysis-Weaknesses
➢Over Geographic Concentration
➢Disadvantages in Life and Health Insurance
SWOT analysis-Opportunities
➢Favorable Demographic Changes
➢Market Expansion
SWOT analysis-Threats
➢Competitive Pressure
➢Certain New Regulations
SWOT analysis
Strong Position in US Market
Brand Recognition and Customer Loyalty
High Ratings
Competitive Pressure
Certain New Regulations
Favorable Demographic Changes
Market Expansion
Over Geographic Concentration
Disadvantages in Life and Health
Insurance
Strengths Weaknesses
Opportunities Threats
Regulator
Federal State
• National Association of Insurance Commissioners (NAIC)
• Federal Insurance Office (FIO)
• Insurance Regulatory Information System (IRIS)
- Database and analytical tool
• Federal oversight power
• State Law & Agency
Specifically, state department of insurance
• Regulatory power
Regulator - NAIC
• Committee Subcommittee Task force
• Update revisions on industry standards on a regular basis• No regulatory power
Solvency Regulation Committee
Subcommittee
Specialized Task Force
Regulator – FIO
• Established under The Dodd-Frank Act
• Within the U.S. Department of the Treasury
POSITION
• Monitoring• Advisory duty• Consultation• non-voting member on
the Council
DUTY• No regulatory power
• Federal oversight
REGULATORY POWER
Regulation – State Law
Statutory Procedure
Legal Force
Regulation
Framework Limit
• Financial Regulation Standards and Accreditation (F) Committee
- Solvency regulation• Principle-based Reserving (PBR)
Review Working Group• Financial Services Modernization
Act (1999)
• Capital Adequacy• Solvency• Debt ratio• Risk management
Industry Standard & Best Practice + Risk Control
Regulatory Environment
State Farm Should…
• Stay in line with industry standard practices
- Insurance rate and form filings - Corporate governance (Companies Deemed to be in Hazardous
Financial Condition)• Meet risk control requirement - Risk-based Capital - Liquidity issue• Comply with full-scale regulations
State Farm Could…
• Involve in the rule-making process• Shape the final rules on systemic
designation - Convince FSOC of its non-systemically important position - A conservatively managed company• Continue to work with Michael
McRaith, Director of FIO, former Director of the Illinois Department of Insurance
Thank you!