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#Ed rust sr drivers
This time the available pool of new business will consist heavily of drivers with blemished records, because independent insurance brokers not paid by State Farm will place many of the better ones with other companies. 'Worried by the Turmoil'įinally, State Farm is accustomed to dealing with a broad cross-section of drivers and culling out the worst. That makes the company, with its longtime "Just Like a Good Neighbor" marketing theme, attractive to consumers, but leaves it with less room for mistakes. It also has some of the lowest rates of any major insurer, typically 10 percent to 15 percent below its competititon. The auto insurance business has been a big loser of late, and State Farm, which was founded here in 1922 to provide low-cost auto coverage to farmers, has done worse than the average. Rust has more reason than most of his counterparts to be worried. They, too, could also face mounting claims if they rush too fast to add new business.īut Mr.
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Farmers, Geico, Allstate, the Nationwide group and the USAA group are among other large insurers that remain committed to writing automobile policies. Still, the company plans to forge ahead, counting on its 17,500 agents to make the new business profitable by taking in enough money from premiums to outweigh any added losses.
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But if State Farm pursues the business aggressively, it could find itself stuck with a large number of high-risk, money-losing policies. 3 Farmers Group, which it strongly wants to avoid. If State Farm declines the new business, the company risks losing market share to other big insurers like No. But many of the motorists will either have poor driving records or live in states like California and New Jersey, which insurers consider the most regulated and least profitable in which to do business. As many companies retrench, tens of thousands of new customers will be coming State Farm's way in the next few years. That puts the State Farm Mutual Automobile Insurance Company, the nation's largest auto insurer, with more than 33.6 million policies in force, at a crossroads. The reason, as he is all too aware, is that the companies believe that state-mandated rate cuts, rapidly escalating car repair bills and skyrocketing injury awards by juries are making it hard for them to make much money on auto policies. But times are far from normal in the car insurance business.Ĭompetitors ranging from Aetna to Travelers to Cigna are curtailing or abandoning their auto coverage in many states, but Mr. Rust Jr., chairman and chief executive of State Farm, would be euphoric about taking policyholders away from rival insurance companies.