Higher Claims Cost Rattle Insurer

The following statement was said by State Farm Insurance founder George Mecherle in his annual address to State Farm employees in June 1934.

“Automobiles are changing. They employ new materials and different construction methods.  They can attain higher speeds… all of which contribute to higher severity and higher claims costs.”

State Farm was founded by George Mecherle in June, 1922.  From the very beginning, his entire focus, and that of every employee of the company was to sell more policies.  In the first seven years of its existence, State Farm sold over 280,000 auto policies.  Then, the Great Depression hit, and still George and his team pushed hard for more sales and more policies.  It wasn’t until 1934 that his financial people brought George a stark realization – that, for various reasons, loss-payments were starting to exceed new policy sales.  The company was bleeding.  Read the rest of the story in my book, “YesterWreck: The History of the Collision Industry in America.”


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