Why is State Farm insurance so big?

Have you ever wondered why State Farm Insurance is such a big company? State Farm was founded in 1922 in Bloomington, Illinois, and has survived both the Great Depression and the Great Recession. 

What makes it such a big company today? If you are seeking answers, you’ve come to the right place. 

Read this article to learn why State Farm Insurance is one of the most significant insurers in the United States and how it compares to other companies. 

Do you want to know what State Farm provides? Check out our State Farm car insurance review for a closer look. Read on to learn why State Farm Insurance is one of the best companies in the country. 

Why is State Farm Insurance so big?

State Farm Insurance is one of the biggest companies in the nation because it has the largest market share in the car insurance industry. Did you know that State Farm is also the leading home insurance company?

State Farm Insurance has the top market share in the auto and homeowners insurance sector. 

What does market share indicate in the insurance industry? Market share is a percentage of sales that an insurance company produces in a specific industry, such as car and home insurance. 

State Farm has held the top market share in the car and home insurance industries for several years. But let’s examine State Farm Insurance’s current market share stats and compare them to other insurance companies. 

Market Shares of the Top Insurance Companies in the United States

The statistics listed above derive from the National Association of Insurance Commissioners (NAIC), which records insurance companies’ earnings and consumer satisfaction reports. Currently, State Farm has the highest market share compared to hundreds of other companies. 

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Why does State Farm Insurance have the highest market share?

State Farm Insurance is a big company because it earns billions of dollars over its competitors. In 2020, State Farm earned over $100 billion from car insurance policies. 

What makes it even more impressive is that it earned over $100 billion during the height of the COVID-19 pandemic. But how does State Farm Insurance compare to other companies? Let’s review how much the best companies earn and compare them to State Farm Insurance.

Earnings of the Top Insurance Companies in the United States

Our research revealed that State Farm out-earned some of the best companies across the United States. Berkshire Hathaway Inc., Geico and other smaller companies, and the Progressive Corporation were State Farm’s biggest competitors. 

Is State Farm publicly traded?

No, it isn’t. State Farm Insurance is a mutual insurance company, which means it’s privately owned by people who purchase insurance policies from the company. So if you were wondering who owns State Farm insurance, the answer is that the policyholders do. There is no giant State Farm parent company, only those who purchase their policies. 

It also indicates that shares in the company aren’t available for public trading. Therefore, investors can’t trade State Farm’s stocks on the public market. This benefits State Farm customers with lower insurance rates and discounts, although they also face risks. 

Companies like Allstate are available for the public market because the stockholders own the company. In other words, Allstate is divided into stocks that various investors can purchase and sell. If an investor controls more stocks in a company, then they can decide the company’s direction.

Does State Farm provide cheap car insurance?

State Farm Insurance is known for its size and affordable car insurance rates. Although insurance rates vary for each driver, we found the average cost of full coverage and liability-only insurance rates from the best companies in the United States. 

Let’s compare State Farm’s auto insurance rates to those of other companies. 

Average Monthly Car Insurance Rates by Company

State Farm may have the number one spot in market share and earnings, but it trails behind Geico and USAA in regard to cheap insurance. However, the best insurance companies provide rates that are slightly above average (which is $94 for full coverage and $50 for liability-only coverage). 

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Is State Farm the best car insurance company?

State Farm may be the highest-grossing insurer in the United States, but it doesn’t make it the best company. [External Link] According to J.D. Power, State Farm Insurance has good customer satisfaction reviews from Florida, New York, and other states in the northwest region of the U.S. 

The northwestern United States includes:

• Idaho
• Montana
• Oregon
• Washington
• Wyoming

J.D. Power uses a 1,000-point scale scoring system. In the regions mentioned above, State Farm scores over 840. Each score is higher than the industry average in that region. Texas is the only state where State Farm has a below-average J.D. Power score (838 out of 1,000). 

High J.D. Power scores indicate that an insurance company keeps customers satisfied through general insurance services, such as claims, payments, etc. Although State Farm isn’t the top company in all regions of the United States, it manages to keep its score above the industry average. 

State Farm Insurance also has an A++ financial strength rating — the highest rating an insurance company can have at A.M. Best. But other auto insurance companies share excellent A.M. Best ratings as well.

Let’s review A.M. Best’s ratings from other companies and compare them to State Farm’s rating.

A.M. Best Ratings of the Best U.S. Auto Insurance Companies

Geico and Travelers have A++ ratings, making them just as financially capable of competing with State Farm. However, American Family, Farmers, and Liberty Mutual have weaker ratings from A.M. Best. 

Does State Farm employ more people than other insurance companies?

Yes, it does. But, State Farm has the highest number of employees in the car insurance industry. Anthem and Cigna have more employees than State Farm, but these companies focus on health insurance policies. 

State Farm Insurance: The Bottom Line

State Farm is one of the highest earners in the insurance industry, and it has earned its place as the top insurance company in the United States. However, State Farm Insurance has struggled with competitive rates.

Insurance companies like Geico provide more affordable rates in some areas of the country, but State Farm may have cheaper rates in specific areas in the United States. Compare multiple insurance quotes to secure the most reasonable rates. 

Ultimately, it’s up to the individual to determine if State Farm is the best company. Therefore, we encourage you to compare car insurance companies for yourself to find a policy that’s right for you.

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