Snapshot of Farmers Insurance Group

The third-largest insurer in the U.S., Farmers Insurance Group serves over ten million households in 41 states. With a particularly strong market in the Southwest and West, Farmers provides auto, home, and life insurance in addition to a variety of financial services. Though the company is headquartered in Los Angeles, it is a wholly owned subsidiary of Zurich Financial Services, located in Switzerland. Farmers accounts for a major portion of Zurich Financial Services’ global premiums, and the powerful brand recognition of Farmers affords its parent company with excellent cross-marketing opportunities. Farmers was founded in California in 1927 by two men from rural backgrounds who believed that the safer driving habits of farmers should be rewarded with cheaper insurance, the same premise on which competitor State Farm began its company. In 2007, Farmers reported a $2.1 billion net income and employed almost 26,000 people. In this post, we’ll provide a snapshot of Farmers Insurance Group by assessing them on the criteria of customer satisfaction levels and financial stability.

Financial Stability

In April of 2008, A.M. Best affirmed Farmers’ financial strength rating of A (excellent). The financial ratings company also affirmed Farmers’ issuer credit rating (ICR) of A. A.M. Best called Farmers’ financial outlook “stable.” Another financial ratings company, Moody’s, actually upgraded Farmers’ financial standing in December of 2008. Moody’s upgraded Farmers’ financial strength rating from A3 to A2 and its surplus note debt ratios from Baa3 to Baa2. Like A.M. Best, Moody’s also called Farmers’ financial outlook stable. In explaining the upgrade, Moody’s pointed to Farmers’ improvements in financial flexibility, profitability, and reserve adequacy. The insurance company has recently exited volatile and complex commercial lines of business, which also greatly improved its financial stability.

Customer Satisfaction

In 2008, J.D. Power & Associates surveyed thousands of customers across the nation regarding their satisfaction with 27 different home insurance companies, including Farmers Insurance Group. Famers’ customers could rate their satisfaction with the company on six different criteria on a scale from 1-5 (five being the best). Here is how Farmers did in the 2008 survey:

• Overall experience: 3/5
• Policy offerings: 3/5
• Pricing: 3/5
• Billing and payment: 3/5
• Contacting the insurer: 3/5
• Claims: 2/5