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.

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.