Compensation System of State Farm Insurance

Compensation System of State Farm Insurance Every business organization has its own philosophy, which drives it towards big success. The same is true for insurance companies that offer different types of insurance covers. Usually, the founders of any organization architect the philosophy under which it will operate.Advertising We will write a custom research paper sample on Compensation System of State Farm Insurance specifically for you for only $16.05 $11/page Learn More The inception of State Farm Insurance Company dates back to 1922 when one farmer, George Mercherle opted to work as an insurance agent because his health conditions could not allow him to continue farming. He turned out to be one of the best sales representatives for an insurance company he was working with. However, at one point, Mercherle was not happy with the company’s insurance policy to farmers. According to him, the company oppresses farmers through low insurance rates and poor business practices. Farmers paid high pre miums despite the fact that they incurred less compensation incidents and drove less kilometers that those staying in urban areas. Over time, Mercherle recommended new policies that detailed new modalities of selling insurance to farmers and city folks. Nonetheless, the employers turned down the offer and instead, told him to go and start his own insurance company. Driven by desire to offer better insurance, Mercherle and other people with same views started State Farm Insurance Company. The policyholders became the owners of this automobile insurance company and in 1928, the company started to decentralize starting from an area office in Berkeley, California. By the year 2000, State Farm had grown into a great insurance empire with over 27 regional offices and 1000 service centers all over United States and Canada. (Rhonda, 2010, p.1). The philosophy of State Farm Insurance lies in offering insurance coverage at an affordable price in tandem with flaxen claim resolution. This philo sophy has been the driving gear of State Farm Insurance Company and today, with 76,500 workers and over 16,000 insuring agents, the company posses with 67 million policies and an asset base of US$ 25 billion-making it the biggest fiscal institution in United States. The current philosophy of â€Å"Good Neighbor† is a reckoning force behind State Farm success. This philosophy has remained vital in establishing different insurance covers at affordable price to consumers. For example, under home insurance cover, State Farm insurers all types of houses ranging from single homes to condominium leasing houses. Perhaps what State Farm ought to do is to insure letting houses against burglary, defacement or conflagration in line with the philosophy.Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Where fire has destroyed houses, State Farm through their Good Neighbor philos ophy, should provide alternate accommodation while awaiting repair of destroyed property. However, through this philosophy, State Farm covers all expenses arising from such disasters. (State Farm Corporate Website, 2010, p.1). Most insurance companies offer general life insurance, which does not include health. However, State Farm offers general health insurance in addition to disability and long term care insurance coverage. The philosophy of Good Neighbor that is, offering affordable insurance to consumers has seen many American homeowners receive health care insurance at a time when they need medical services most. The introduction of long term care is so far one of the best insurance coverage targeting the old, persons with disabilities, and the injured. In the current global economic downturn, underprivileged people can access health care services or health care insurance premiums at a cheaper price thanks to â€Å"Good Neighbor† philosophy from State Farm. (Case Study: State Farm, 2010, pp. 1-5). As a mode of enhancing this philosophy, State Farm should target Young Adults aged between 18 and 25. This is because there are over 33 million uninsured persons in America falling in this age gap. With the philosophy, State Farm should provide insurance brands to students and young adults falling in this age gap in order to detach them from other insurance and make them independent. Additionally, since State Farm prefers business model (use of agents) rather than insurer model (use of call centers and internet), there is high probability that in the current information technology age, many persons falling in this age do not have an elusive insurance coverage. Business model has its advantages that include job creation among other things. However, the Good Neighbor philosophy of State Farm can reach young adults easily now that many of them are prone to internet than attending call centers. Many young adults perceive State Farm as conservative and one tha t clings to traditional ways of doing business. However, with the Good Neighbor philosophy, which targets all people the adoption of insurer model through call centers and internet, will see young adults seek insurance brands from State Farm. (State Farm Plans Book Ucla 2010, 2010. p.1). State Farm is a mutual insurance company belonging to many policyholders. The first capital of starting State Farm came from policy holders who until now remain owners. Although currently comprising of shareholders, the company does not pay form of dividends to shareholders. Instead, all dividends including profits and status belong to policyholders.Advertising We will write a custom research paper sample on Compensation System of State Farm Insurance specifically for you for only $16.05 $11/page Learn More This is the reason why State Farm continues to expand as policyholders choose to use their financial earnings to expand the company. Additionally, the structure protects the company’s finances in that, even if share prices drop or shareholders stage demonstrations, the company will still move on smoothly as this appears no issue. Current statistics indicate that State Farm is the most successful insurance company in United States especially as car and home insurer. This is because of its Good Neighbor philosophy that includes affordability and ability to handle claims fairly and squarely. The mission statement of State Farm is to assist people to deal with arising risks, recuperate from misfortunes and attain their objectives. In order to exhibit good neighbor philosophy, State Farm embarks in market partnership with insurance consumers build on shared values such as financial empowerment, honesty, mutual trust and eminent insurance services. (Case Study: State Farm, 2010, pp. 8-10). Reference List Case Study: State Farm. (2010). Retrieved from http://webcache.googleusercontent.com/search?q=cache:P_Z_aLyoxjkJ:jomc279.files.wordpress.com/2009 /08/casestudy_abbr.pdf+outline+the+current+compensation+philosophy+for+your+organization+StateFarm+Insurance+Companyhl=engl=ke Rhonda, C. (2010). State Farm Mutual Insurance Company. Retrieved from http://insurance.suite101.com/article.cfm/state-farm-mutual-insurance-company State Farm Corporate Website. State Farm Insurance Company. (2010). Retrieved from statefarm.com State Farm Plans Book Ucla 2010. (2010). Retrieved from slideshare.net/karlaliu/state-farm-plans-book-ucla-2010