The following market analysis focuses on the insurance industry in the United States and the largest operator in the market, State Farm Insurance Companies. The competitive landscape and market share of the United States insurance market is discussed. The company is analyzed in terms of strengths and weaknesses, and market position. Finally, recent marketing strategies will be discussed and analyzed.
Company Profile: State Farm Insurance Companies
One State Farm Plaza
Bloomington, IL 61710 USA
Revenues: $ 31,664 million 2007
$ 35,037 million 2006
Chairman and CEO: Edward B. Rust Jr.
State Farm Insurance operates through multiple subsidiaries to market life, health,
property, and casualty insurance, banking, and other financial services.
Overview of the United States Insurance Industry
The insurance market includes two sectors, life insurance and non-life insurance. The life insurance sector includes life or mortality protection and annuity products. The non-life insurance sector includes accident, health, and property and casualty insurance. In 2007 the US insurance market accounted for 33.6% of the global insurance market, following Europe. The total amount of revenues from premiums for the US insurance market was $ 1,240.1 billion. The non-life sector accounted for 53.4% of the market share, while the life sector accounted for 45.6% The industry grew at a rate of 4% from 2003 to 2007, but is expected to decline slightly from 2007 to 2012. The three largest competitors in the US insurance industry were State Farm, AIG, and Metlife. (Datamonitor, November 2008) State Farm Insurance Companies
State Farm Insurance Companies
In 2007 State Farm Insurance contributed the largest portion of value of the United States insurance market followed closely by AIG and Metlife. State Farm operates through 11 subsidiaries targeted toward specific products and specific markets. The primary subsidiary markets automobile and homeowners insurance in the US and int three Canadian provinces.
State Farmer Federal Savings Bank provides deposit, credit, and loan services. State Farm Mutual Auto markets health and disability insurance through a collaboration with Assurant Health. Another subsidiary works in collaboration with Lloyds. State Farm has subsidiaries that operate specifically in the states of New York, Connecticut, Wisconsin, Texas, New Jersey, and Florida.
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Marketing Campaigns and Strategies
With declining position in the auto and other target market segments State Farm launched a massive advertising campaign in 2004 and continuing through 2006. In 2004, the “True Stories” advertising campaign featured real agents and actors depicting specific claims situations. This campaign was so successful that it aired during the Super Bowl of 2006. In 2005, State Farm became the official sponsor of the NCAA Championships in a collaboration with the NCAA and CBS Sports. Finally, in the Fall of 2006 State Farm entered into a three year collaboration with the NFL for exclusive sponsorship of the NFL Pro Bowl game beginning in 2007. These strategies expand on State Farm’s popular and well known slogan, “Like a good neighbor, State Farm is there.” Read also a project report on life insurance company
project report on life insurance company
State Farm’s management realizes that advertising strategies and marketing campaigns must be supplemented with operational strategies that will maintain and enhance the company’s market position. In the 2007 Annual Report, Chairman Edward B. Rust Jr. stated “Yet simply being a good neighbor in today’s competitive market is not enough.” This statement is followed by the commitment to provide cost effective and time efficient services by enhancing the website as a customer service and sales tool. The statement also affirms the need and plans to respond to diversity and changing demographics in the market.
State Farm Insurance Companies will continue to be a leader in both the US and global insurance industries. Legal and regulatory issues limit some State Farm agents ability to cross market products and services. Therefore, the company will need to enhance marketing of banking and investment products to existing customers. Like many of it’s competitors State Farm must also enhance it’s positioning in other areas of financial services. State Farm is already positioned in the banking and mutual fund investment sectors. The company’s website is designed to capitalize on ease, speed, and low switching cost in banking and investments as well as insurance. With the reduction in homeowners policies and increasing banking and investment potential State Farm can maintain and enhance it’s market share and value.
Dinger, E.. (2007). State Farm Mutual Automobile Insurance Company. Encyclopedia of Major Marketing Campaigns, Vol. 2. (pp. 1571-1574). Detroit: Gale. Retrieved February 27, 2009, from Gale Virtual Reference Library via Gale.
Datamonitor. (2008, November). Insurance Industry Profile: United States, Retrieved February 20, 2009, from Business Source Premier database.
State Farm Abandons Florida's Homeowners Market.(11:00 AM-12:00 PM)(Broadcast transcript)(Audio file)(Brief article). (Jan 28, 2009). Morning Edition. Retrieved February 27, 2009, from General OneFile via Gale.
State Farm Insurance. (2009). Annual Reports. Retrieved February 20, 2008, from http://www.statefarm.com/about/media/annualrep.asp.
Datamonitor. (December 10,2008). Company Profile: State Farm Insurance Companies
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