If ever a reputation for personal integrity and honesty was crucial to building a successful business, the importance of reputation was proven by the life story of George J. Mecherle. Mecherle was a McLean County farmer and the founder of the State Farm Insurance Company, a company that today is one of the top 20 of the Fortune 500. His last name is pronounced as if it were "Ma-herl." His parents were immigrants from Germany and he was born on June 7, 1877 as the fifth child on a family farm near the small town of Merna, Illinois about nine miles west of Normal. He only had one year of high school and married a neighbor, Mae Perry, in 1900.
His biographers have written that George was a good story teller and was well liked as a trusted business consultant. He worked his farm from 1900 to 1918 and was very successful. He owned more than 480 acres of prime land in McLean County and served as the county road commissioner and was a member of the Old Town Mutual Fire Insurance Company. Due to an illness of his wife, he moved his family briefly to Florida but that climate did not help her so they moved back to Normal around 1920. He worked for a while as an automobile insurance salesman. He reasoned that since farmers who drove trucks got into few accidents than urban car drivers, the farmers should get lower rates. In other ways, he also felt that insurance companies from big cities did not know the needs of farmers.
According to Richard M. Rockwood, one of his biographers, George became interested in the Tazewell County Farm Bureau in 1921. He wanted to develop an insurance service for the Farm Bureau that would have a good reputation that farmers would trust and he eventually would seek a formal endorsement for the service from the farm bureau. Playing both to reality and the rural perception of city insurance companies as less than honest, George emphasized that his would be "an honest insurance company." He was sure his company could charge a lower rate and still make a profit with enough loyal support from farm customers. George founded State Farm Insurance was founded with headquarters in Bloomington in 1922. He started his first branch office to support agents in the field in Berkeley, California in 1928.
Mecherle was an innovator in the field of insurance. He started the idea of good driver discounts on policy premiums. His idea of charging six-month premiums instead of the customary annual lump sum was good for farmers who could pay smaller amounts during the planting season and it was good for his company because they could make quicker adjustments to changes in the market price if competition undercut them. another helpful innovation was to give support to agents in the field by having the home office do the paperwork and free up the agents to do what they did best and sell or renew policies. Still another was a one-time membership fee that helped State Farm cover the cost of acquiring new policies. Eventually, the farm bureau did endorse State Farm services and this was a tremendous advantage over competing companies. Only one year after being founded, State Farm had sold policies in 46 rural Illinois counties.
Thanks largely to George Mecherle's personal reputation for integrity and fair dealing, by 1927, State Farm Insurance had 183 employees and its annual income rose from $22,000 to $773,000. Only a decade later by 1937, State Farm had expanded nationwide with over one million policy holders and became the largest automobile insurer in America. The company was so successful that even during the Depression it was able to build up financial reserves that made it able to weather bad times and either gain or hold onto market share.
According to Richard Rockwood, the five key business leadership skills of George Mecherle were honesty and respect; focus; a great judge of character; determination; and good communications skills. Once he found a combination of models that would allow him to give good service and a reasonable profit, Mecherle stuck with them and did not allow distractions to deter his consistently hard won good will with customers. George Mecherle retired as CEO of State Farm in 1937 at the age of 60.
State Farm Insurance today is headquartered in Bloomington, Illinois. It is one of the top 20 companies of the Fortune 500 and had more than 79,200 employees and more than 16,700 agents serving 71.6 million policies in the United States and Canada.
George J. Mecherle died at the age of 73 in 1951. He is buried in Bloomington. He had married a second time in 1944 after his first wife died. His second wife Sylvia died in 1965 at the age of 80.