Farmers Insurance Group

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Farmers Insurance Group
Type Reciprocal[1]
Founded Los Angeles, California in 1928
Founder Thomas E. Leavey and John C. Tyler
Headquarters Los Angeles, California, United States
Industry Insurance
Employees 18,000
Parent Zurich Financial Services
Website http://www.farmers.com/

Farmers Insurance Group is a provider of insurance management services and a holding company. It is the third-largest writer of both private passenger automobile and homeowners insurance in the United States.[citation needed]

The Farmers Insurance Group of Companies is based in Los Angeles, California, and operates in 41 states. The company is now a wholly owned subsidiary of Zurich Financial Services, Zurich, Switzerland.

Contents

[edit] Activity

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Please improve this article if you can (October 2007).

Farmers Group, acting under the "dba" Farmers Underwriters Association, and its wholly owned subsidiaries, Truck Underwriters Association and Fire Underwriters Association, acts as the attorney-in-fact for three reciprocals or inter-insurance exchanges — Farmers Insurance Exchange, Truck Insurance Exchange and Fire Insurance Exchange. A reciprocal or inter-insurance exchange consists of policyholders (subscribers) who exchange contracts with one another so that they can provide themselves with insurance against certain losses. In addition, Farmers Group, Inc., is a life insurance holding company of the Farmers New World Life Insurance Company.

[edit] History

 All or part of this article may be confusing or unclear.
Please help clarify the article. Suggestions may be on the talk page. (October 2007)

In 1928, Thomas E. Leavey and John C. Tyler founded the first Farmers Company in California.

In 1988, British American Tobacco Industries attempted a takeover bid on the company, but the bid was rejected[2]. A year later, the Farmers Board and stockholders finally agreed to be acquired by BATUS for $5.2 billion. Farmers Group became part of the B.A.T. financial services group.

In September 1998, the Zurich Financial Services Group was created from the merger with the financial services business of B.A.T. Industries Through a dual holding structure, Zurich Financial Services was owned 57% by Swiss-quoted Zurich Allied AG, representing the former shareholders of Zurich Insurance Company, and 43% by London Stock Exchange Allied Zurich p.l.c., the de-merged financial services interests of B.A.T. Industries p.l.c.[citation needed]

In October 2000, the Zurich structure was simplified and unified under a single Swiss holding company. Allied Zurich and Zurich Allied shares were replaced by shares of the newly incorporated Zurich Financial Services with a primary listing on SWX Swiss Exchange (ticker symbol: ZURN) and a secondary listing in London (LSE: ZURN). Zurich Financial Services American Depositary Receipts (ADRs) are traded on the American Stock Exchange (AMEX: ZFSVY).

In March 2000, the Farmers Insurance Group of Companies merged with Foremost Corporation (Foremost Insurance Company)[3], a leading writer of manufactured homes and a prominent insurer of recreational vehicles, boats and other specialty lines.

[edit] Accolades

Hurricane Rita struck an area of the Texas Gulf coast where Farmers had many policyholders. The mayor of Beaumont, Texas, who had a number of personal connections with Farmers,[4] thanked Farmers in a Leaders Magazine editorial on hurricane recovery, not only for their excellent service to his constituents, but for donating generators needed to get the city government back up and running.[4]

In 2005, 2006, and 2007 Farmer's Insurance Group won the J.D. Power award for Call Center Customer Service Excellence.[5]

The 2006 American Customer Satisfaction Index conducted by the University of Michigan found that customer satisfaction with Farmers was at exactly the same level as the overall Property and Casualty Industry. In addition, Farmers satisfaction level was the most improved from 2005 to 2006 among the companies surveyed.[6]

During the October 2007 California wildfires, Farmers Insurance was one of only a few companies[7] to set up facilities to aid their customers. In addition to writing checks for evacuation costs, damage claims, lodging and meals, the company ran commercials urging their customers to take advantage of these facilities.[8] The company now also has 2 buses serving as Mobile Command Centers[9], (created by its Strategic Initiatives Department and managed by its Project Managers, Odom Wu and Kevin H. Miller) and are the only such mobile units in the insurance industry with satellite and mesh network technology where customers could file claims, be issued checks,[10] and receive meals.[7] This mobile claim center arrived at the Qualcomm Stadium only two days after the fires started.[11]

[edit] Criticism

[edit] Complaints to state insurance departments

In 2006, Farmers Insurance received the highest number of complaints to state insurance departments in Washington[12][13] and Oregon.[14]

[edit] Lawsuits

In Goddard v. Farmers Insurance (2008), Farmers was ordered to pay $2.5 million for handling a claim with bad faith and "stonewalling" during settlement negotiations. The original punitive damages award was $20 million. [15] [16]

In Betty Jo Walker v. Farmers Insurance (2007), Farmers was fined $3 million dollars for not defending a pair of limited-income homeowners from a negligence claim.[17]

In Bell v. Farmers Insurance Exchange (2004), Farmers Insurance was sued for failing to pay overtime to its claims adjusters. The company settled and paid out over $200 million to its employees.[18] The company claimed that administrators were exempt from overtime.[18] At the time, this was the largest overtime class action suit in the United States.

In Ballard v. Farmers Insurance (2003), the company was sued for failing to cover repairs for a water leak which eventually led to toxic mold growing in the owner's home. The original settlement was for $32 million, but was reduced to $4 million.[19]

In 2005, the company refused to pay a claim on a car accident because the accident was allegedly caused intentionally by another driver.[20] Despite Farmers' claims, the state of Washington ordered the company to pay the claim.[21]

[edit] Colossus Lawsuit

The company was also sued by a woman who was involved in a car accident and was refused compensation despite her claims of being in pain, losing her career, and being unable to have another child. The suit claimed that Farmers used Colossus, a third party computer program, to evaluate her claim, and that the program served as a way to rip off their customers.[22] The company's use of Colossus was further questioned by two company whistleblowers who remarked that "there's so much pressure on you to settle for the least amount possible" using prizes such as $25 gift certificates or a pizza party for adjusters achieving lowest settlements.[23]


[edit] Ratings

In 2003, Consumer Reports rated Farmers Insurance Homeowners "Worse" for both "Problems with Claim" and "Delayed Payments".[24] In March 2006, Consumer Reports considered Farmers Insurance one of the "poorest performers" amongst 27 insurance companies in terms of paying off (auto) claims in 30 days or less.[25] In the JD Powers 2007 Collision Repair Satisfaction Study, which covered customers surveyed between 2001 and 2004, Farmers Insurance received the lowest possible ratings in all four of the studied categories: "Overall Experience", "Claim Settlement", "Claim Representative" and "Claim Process and Procedures". Of the 26 companies surveyed, Farmers was tied for 20th place.[26]


[edit] References

  1. ^ Basic Primer on Reciprocal Insurance Exchanges. Retrieved on 2007-11-04.
  2. ^ “Farmers Group Rejects Offer”, The New York Times, January 21, 1988, <http://query.nytimes.com/gst/fullpage.html?res=940DE3DD1F3CF932A15752C0A96E948260> 
  3. ^ "Foremost Corporation of America Announces Completion of Merger", PR Newswire, 2000-03-07. Retrieved on 2007-10-22. 
  4. ^ a b “Social Responsibility: The Right Thing to Do”, Leaders Magazine 29 (3): 83-84, July 2006, <http://leadersmag.com/Editorial/Issues/2006.3_Jul/082SocialResponsibility.pdf> 
  5. ^ J.D. Power and Associates (2006-11-08). "Farmers Insurance Recognized for Call Center Customer Satisfaction Excellence for a Second Consecutive Year". Press release. Retrieved on 2007-10-22.
  6. ^ American Customer Satisfaction Index: Property & Casualty Insurance. Retrieved on 2007-10-22.
  7. ^ a b Lifsher, Marc (2007-10-24), “Insurers roll even before smoke clears”, Los Angeles Times, <http://www.latimes.com/news/printedition/asection/la-fi-insure24oct24,1,718952.story?coll=la-news-a_section> 
  8. ^ Howard, John W. (2007-10-26), The California Wildfires: A Dispatch from the Front, <http://www.familysecuritymatters.org/challenges.php?id=1385117>. Retrieved on 1 November 2007 
  9. ^ Inside Farmers Mobile Claims Center. Retrieved on 2008-03-25.
  10. ^ Mobile Response Vehicles Helping Fire Victims File Claims. Retrieved on 2007-11-01.
  11. ^ Allen, Mike (2007-10-29), “Most Homeowner Policies Cover Cost to Rebuild, Not Property's Market Value”, San Diego Business Journal, <http://www.sdbj.com/industry_article.asp?aID=61349182.56366202.1545856.6344067.1828206.760&aID2=118903>. Retrieved on 1 November 2007 
  12. ^ McGann, Chris (2007-10-12), “Big insurers dig deep to fight R-67”, Seattle PI, <http://seattlepi.nwsource.com/local/335354_insurance13.html> 
  13. ^ Washington State Auto Insurance Complaints 2006 Private Passenger Auto Insurance Company Complaints. Retrieved on 2007-10-22.
  14. ^ Oregon Department of Consumer & Business Services: Oregon State Auto Complaint Report. Retrieved on 2007-10-22. - Farmers Insurance had the most number of auto complaints in 2006 (p.13)
  15. ^ SEBOK, ANTHONY (Mar. 11, 2008), The Oregon Supreme Court's Recent Decision on Punitive Damages: Why It Took the Wrong Approach, Findlaw, <http://writ.news.findlaw.com/sebok/20080311.html> 
  16. ^ Goddard v. Farmers Insurance
  17. ^ Bruss, Robert (October 3, 2007), “Farmers Insurance learns hard lesson in homeowner lawsuit”, The Boston Globe, <http://www.boston.com/realestate/news/articles/2007/10/03/farmers__insurance_learns_hard_lesson_in_homeowner_lawsuit/> 
  18. ^ a b McKee, Mike (September 7, 2004), “Huge Settlement Ends Record-Setting Overtime Class Action”, The Recorder, <http://www.law.com/jsp/article.jsp?id=1094073220047> 
  19. ^ "$32 Million award in toxic-mold suit slashed", Associated Press, November 13, 2003. Retrieved on 2007-10-22. 
  20. ^ Westneat, Danny (October 14, 2005), “Crash victim's insurer should have a heart”, The Seattle Times, <http://seattletimes.nwsource.com/html/localnews/2002560033_danny14.html> 
  21. ^ Westneat, Danny (October 20, 2005), “State tells insurer to pay”, The Seattle Times, <http://seattletimes.nwsource.com/html/localnews/2002569740_danny19.html> 
  22. ^ Heckman, Candace (May 15, 2003), “Does insurance company 'low-ball' pain and suffering?”, Seattle Post-Intelligencer, <http://seattlepi.nwsource.com/local/122105_colossus15xx.html> 
  23. ^ Heckman, Candace (May 15, 2003), “Low-ball offers nothing new in insurance industry”, Seattle Post-Intelligencer, <http://seattlepi.nwsource.com/local/122047_colossusside15.html> 
  24. ^ ConsumerReports.org, Ratings Homeowner Insurance, September 2004
  25. ^ “Shop Smart: Ensuring you get the best auto insurance”, Pittsburgh Post-Gazette, March 12, 2006, <http://www.post-gazette.com/pg/06071/668622.stm> : Editors of Consumer Reports considered Farmers Insurance one of the "poorest performers".
  26. ^ 2007 Collision Repair Satisfaction Study. Retrieved on 2007-10-22.

[edit] See also

[edit] External links