The Farmer From Merna

by Karl Schriftgiesser

This is the biography of George J. Mecherle, an Illinois farmer who conceived of a plan to bring low-cost honest auto insurance to the farming people of his home state. It tells of his struggle to get the business established and the growth of his venture.

Genres: Business, Nonfiction, Biography, History

272 pages, Hardcover

First published January 1, 1955

Reviews

[Daniel Ottenwalder · Rating 4 out of 5]

God bless America. This country has created so much value in ways we can’t even comprehend. A son of farming immigrants from Germany makes one of the largest insurance companies in 30 years. This book follows George Mercherle's life, the founder of State Farm. The critical lesson is to follow the plan if you have done your homework. No one believed in George when he had the idea for State Farm; he was in his 40s and was a farmer with no history in insurance. He believed insurance could be done better and more honestly by focusing on providing better rates (low-cost provider) for farmers through a lifetime membership plan, 6-month premiums, and incentive alignment for his sales force. These three elements gave George a competitive advantage in terms of the cost to start growing. Lifetime memberships were a customer acquisition cost (40-80%) paid to agents for new customers. At the same time, six-month premiums were not wholly new but were a reasonably unused practice by the large players. The timing of premiums allowed for better premium adjustments and lower upfront costs to customers. This concept also took advantage of Farm Bureau associations to create a part-time sales force to supplement income for association members. Ultimately, this book demonstrates what it takes to scale an insurance business. It would help if you had a low-cost and scalable sales organization. I am giving it four stars only because it felt too flowery.

[Dewayne · Rating 3 out of 5]

I have been employed at State Farm for 15 years and was given this book on day one, but never read it. I felt the urge to pick it up after attending a class focused on strategic decision making and how history plays a major part in what happens next. I thought what better way to understand State Farm's history than read about the man who built it. G.J. of his time would be equal to a Steve Jobs of today. I never knew how much of the auto insurance industry today was defined by his innovative thought and passion to make life better for average farmer by not over paying for insurance. Even more amazing is how the culture he built over 90 years ago is still reflected today. That is a company with a noble mission of helping people and employees who are like family.

While I would not call this book an easy read. I would pass this on and suggest all State Farm employees read it at least once.

[Scott Leatherman · Rating 4 out of 5]

Although the general population may find this mundane, it is a definite must read for anyone who works for State Farm. This is mainly an biography of our founder and the early years of State Farm.
The first couple of chapters discussed GJ Mecherle’s father’s migration from the village of Untermasholderbach in Germany and GJ's childhood. These first few chapters were slow to develop and to be honest pretty boring; but if you can get through those, the rest of the book is very fascinating. Not only do you find out the inspiration behind why GJ started the company but the struggles he faced creating it during a economic down turn.
I was very impressed and surprised to learn how many innovations this young company brought to the insurance industry that are still around today and how many employee benefits State Farm pioneered in the work place. This really helped me regain pride in the company.
Again I would recommend this book to any current or future State Farm employee or agent.

[Todd · Rating 3 out of 5]

A good history of the beginnings of State Farm. Since I actually work on corporate governance issues at SF, I figured it was finally time to read this one. An interesting look at G.J. Mecherle and the humble origins of the company, but it probably won’t be very interesting unless you work for State Farm.

[Derik Frederiksen · Rating 3 out of 5]

Amazing backstory of State Farm, but if you’re not affiliated with the company you will be very bored.

[James · Rating 4 out of 5]

Nicely written hagiography explaining some of the beginnings of State Farm.

Interesting as a case study of a start-up insurer that grew quickly and profitably. Partnering with the Farm Mutuals from the very start in 1922 delivered a pre-existing distribution network and better than average risks, probably the key to initial success. Writing six-month policies rather than the standard 12-month required less cash upfront from customers so policies were easier to sell, and using a "membership fee" to cover commissions lowered the company's initial cash needs for acquisition costs. Catering to a rapidly growing segment of the economy helped too (until the 1930s): the number of cars on US roads doubled within ~6 years of State Farm's start.

A less-emphasized part of the story was the management contract George Mecherle set up with State Farm, where his agency received $1 of each renewal premium. Possibly more like a reciprocal/AIF arrangement than a true mutual. By the time State Farm reached 1 million auto insurance policies in force in 1944, Mecherle - who at this point owned 100% of the agency - might have been earning nearly $2 million per year (assuming the renewal premium was paid twice per year on the six-month policies), or almost 8% of State Farm's top line. Based on the company's 2024 premiums, this would be about $8 billion. The arrangement became less popular as the company grew; eventually it was discontinued.

[Mark · Rating 4 out of 5]

The chapters on the young State Farm are interesting. I liked the high growth story in a business as stable as auto insurance. The affects (or lack of them, until 1946) of WWII were unexpected. That held the second half of the book together, for me.

The book's later chapters are interesting to someone familiar with the internal workings at the company. They're definitely skimming material for anyone else.

[Paul Elliott · Rating 2 out of 5]

While it used antiquated language and included way too much detail, I enjoyed learning more about State Farm’s origin story.