The History of Farmers Insurance
The Farmers Insurance Group of Companies is currently the third largest insurer for property and casualty insurance in the United States. Farmers operates in 41 states with approximately 17,500 independent agents and nearly 20,000 employees. The Farmers Insurance Group of Companies writes many lines of business including auto insurance, home insurance and life insurance. Farmers also offers various types of financial service products. Farmers was founded in 1927 as the Farmers Automobile Inter-Insurance Exchange.
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The Beginning
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Farmers was organized at the beginning as a reciprocal insurer. This meant that individual policyholders acted like subscribers who exchanged contracts of insurance with each other to provide protection against losses. In 1927, the company issued 3 million shares of common stock and sold its first insurance policy on March 28, 1928. Within the first two years after the founding of the company, 40,000 policies were issued.
The Depression
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Many insurance businesses closed their doors during the Depression that started in 1929. One of the 30 percent of companies that survived the Depression was Farmers insurance. During this time the company paid all of its claims in cash instead of using non-negotiable paper that was used by other insurance companies. In 1935, the company introduced a new Truck Reciprocal Exchange that specialized in truck insurance. The company had income of almost $4 million by 1937.
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World War II Era
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Profits continued to grow for the company during World Was II even though the government instituted gas rationing for the war effort. By 1943 the company had asses of almost $10 million and written premiums of nearly $9 million. The company celebrated its 20th anniversary in 1948.
Diversification
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During the 1950s and 1960s, the company's exchange businesses experienced an increase in written premiums for the period. From 1948 to 1958, the fire exchange business increased premiums from $575,000 to more than $7 million. The truck exchange business increased premiums from $9 million to $36 million. New programs such as a monthly payment plan were introduced in 1961.
An Era Ends
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Founder and CEO John Tyler died in 1973 at the age of 86. He was succeeded by co-founder Thomas Leavy as CEO until his retirement on the company's 50th anniversary in 1978. He continued to serve as an adviser to the company until his death in 1980.
Losses and Mergers
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The decades of the 1980s and 1990s were challenging to the company. Losses mounted for the company with claims from the 1989 San Francisco earthquake, the Oakland fire of 1991, and the Northridge, California earthquake in 1994. Farmers was acquired by the British American Tobacco Company in 1988. In 1998, the British American Tobacco Company merged with the Zurich Insurance Co. to create the Zurich Financial Services Group.
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