It's a first for State
Farm Insurance Co. of Bloomington, Ill. The country's largest
property/casualty insurer has begun selling policies underwritten by
another company. Through its network of 16,000 agents, State Farm now
offers individual medical insurance plans underwritten by Fortis Health of Milwaukee, Wis.
Both companies plan on reaping mutual rewards.
Prior to the agreement, State Farm had offered only hospital/surgical health insurance plans
for more serious illnesses and injuries. "Now we can offer our
customers individual health plans with features like precription drug
and wellness benefits," according to Murray Payne, a State Farm
spokesperson.
| This is the first time State Farm will sell insurance underwritten by another company. |
Fortis
spokesperson Rob Guilbert, who did not disclose the terms of the
agreement, says, "This move will really allow us to expand our
distribution channels."
While
Fortis will benefit from the sheer size of State Farm's sales force —
the insurer estimates it serves one of every four households in the
United States — State Farm now will be able to offer its customers
comprehensive insurance plans in addition to its own range of
property/casualty insurance products. The company is the top writer of total premiums for
automobile and homeowners insurance lines. According to A.M. Best Co.
data for 1999, State Farms has 34 billion in net premiums. Both insurers have experience in partnering with other
companies. State Farm agents have worked with banks to arrange car
loans for their customers, according to Payne, and Fortis sells health
insurance products through other insurers such as Reliastar, MetLife,
and the Aid Association for Lutherans, Guilbert says. According to Payne, the products will be marketed under
Fortis Health's name and Fortis will service the customers. The
policies are already being sold in eight states, he says, with another
32 states to be added by next year.
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