wenqi gu, hui cao, mengdi wu, yijia liu, yiya zou, jin wang, zijun zhang, huan huang

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!