state farm bank compliance test answers

The Withdrawal Agreement protects those EU citizens residing in the United Kingdom, and UK nationals residing in one of the 27 EU Member States at the end of. Alabama Power is an electric utility serving 1.5 million customers with reliable and affordable electric service. To verify another OFAC document, please contact the OFAC Compliance Division there is no blockable interest in the inquiry and the bank can answer the. state farm bank compliance test answers

State farm bank compliance test answers -

State Farm Life Insurance Review

State Farm Life Insurance has built a solid reputation for providing great customer service with a varied product line for its customers for several years running. The company offers options for all types of life insurance, including term life insurance, permanent life insurance, and many optional add-on riders. 

Here’s our review of State Farm Life Insurance to help you compare life insurance policy options and decide if this is the right life insurance company for you.

Company Overview

Headquartered in Bloomington, Illinois, State Farm Life was founded in 1929 and has been offering life insurance for over 80 years. According to its website, State Farm Life is ranked the second-largest life insurer "based on policies in force in the U.S. since 2016."  

State Farm offers life insurance policies in every state except Massachusetts. Policies in New York and Wisconsin are issued by State Farm Life Accident Assurance Company. 

State Farm offers a full range of services online, including self-servicing of policies, an informative blog, calculators to figure out how much life insurance you need, and online quotes. State Farm sells life insurance through local agents who you can meet with in person or speak to by phone to get quotes and review various options.

Available Plans

State Farm offers eight different life insurance plan options that work well for people of various ages and at different stages in life. The plans also offer features that allow you to convert term to permanent, add coverage at various intervals, and in some cases build cash values. Take a look at the full roster of policy offerings by State Farm Life below.

Term Life Insurance

State Farm offers three term life insurance plans that provide coverage with terms from 10 to 30 years. Depending on the plan you choose, you can enjoy level premiums and even build a cash value you can borrow against.

Select Term Life Insurance

Select Term provides life insurance with three possible terms: 10, 20, and 30 years of coverage. Premiums are level for the term so you won’t have any surprise increases, which makes it easy to budget.   

Once your term is up, Select Term offers the option (for an additional cost) to get more coverage up until the age of 95. Note that the additional cost may be more expensive compared to what you were paying on your term plan. 

For example, issue ages for the term life are:

  • 10-year term available from ages 18 to 75
  • 20-year term available from ages 18 to 65
  • 30-year term available from ages 18 to 45

Select Term also offers riders, such as the option to add a spouse or child, and also to convert to a permanent life insurance policy for yourself or the insured spouse or child without an additional medical exam.

Return of Premium Term Life Insurance

State Farm also offers a Return of Premium Term plan with a level premium payment for a term of either 20 or 30 years. The advantage of this policy is that you may be eligible for a return of the premiums you paid at the end of the term if you haven’t used your death benefit.

Return of Premium insurance also accumulates cash value so you can borrow money against the policy during the level premium period. The ability to borrow against a term policy is a special feature not available with most term life insurance policies. However, while reviewing the product benefits and small print of the terms, we noted that it is important to be aware that unpaid loans or withdrawals will reduce the guaranteed death benefit.

Issue ages for Return of Premium plans are:

  • 18 - 45 for Return of Premium Life 30
  • 18 - 60 for Return of Premium Term Life 20
  • 18 - 55 for Return of Premium Life 20
  • 18 - 45 for Return of Premium Life 30 for tobacco users

Instant Answer Term Life Insurance

State Farm’s Instant Answer Term Life policy is a no-medical-exam-required policy available for people ages 16 to 45. Coverage is for $50,000 and continues up to age 50 or 10 years after the policy issued, whichever is later.

Whole Life Insurance

State Farm offers several Whole Life insurance plans with level premiums that build tax-free cash values. Since these are permanent life insurance policies, you can access the cash value through loans during your lifetime. Some policies may also be eligible for dividends that can be paid in cash or used toward reducing your premiums or increasing your coverage.

Limited Pay Life

Limited Pay Life is a good option to choose if you only want to pay premiums for a specific length of time and do not mind paying a little more to finish your payments early. State Farm offers pay terms of 10, 15, or 20 years. You pay for the number of years you select and then keep the policy for life after your term ends with no additional premium payments. 

Limited Pay Life policies also accumulate cash values that can be borrowed against and may earn dividends.

Single Premium Life

State Farm’s Single Premium Life Insurance plan lets you take out a whole life policy that you can pay off in one lump sum. Aside from the advantage of not having to pay premiums, this policy is eligible for dividends and has guaranteed cash value. The disadvantage is that it is considered a Modified Endowment Contract which can have tax implications. Be sure to find out more about this before selecting this kind of plan. 

The minimum value for this plan is $15,000 and the issue age is 0 to 80 years old.

Final Expense

State Farm’s Final Expense insurance policy offers level premiums up to age 100 and a fixed death benefit amount of $10,000. The policy accumulates tax-deferred cash value and may also be eligible for dividends. 

You must be between 50 to 80 (50 to 75 in New York) to be eligible for a final expense policy.

Universal Life Insurance

State Farm’s Universal Life Insurance is a flexible policy that lets you raise or lower your coverage (and premiums) throughout your life to meet your changing needs. Individuals up to age 85 are eligible for universal life insurance. 

Coverage starts at the following limits based on age:

  • $25,000 for ages 0 to 17
  • $50,000 for ages 18 to 54
  • $25,000 for ages 55 to 85

There are two death benefit options in the universal life insurance plan:

  • Level death benefit: Offers a set amount
  • Variable death benefit: The amount varies based on the value of your account

Joint Universal Life

State Farm’s Joint Universal Life Insurance covers two people on one policy and is a cost-efficient solution when you can’t afford or don’t want to buy two policies. This policy can be issued to individuals aged 18 to 85 and offers coverage starting at $100,000. 

Joint Universal Life policies also accumulate cash value which can be accessed during your lifetime.

Survivorship Universal Life Insurance

Survivorship Universal Life Insurance is a cost-effective type of universal life insurance policy that only pays out after both people on the policy have died. Because you are covering two people on one policy, it is generally less expensive than buying two separate policies. This policy can be issued to individuals aged 18 to 90 (18 to 78 in California) and offers coverage starting at $250,000. 

The money you pay for this policy goes partially to the premium and partially into a federal tax-deferred cash value account. You can access the cash value if needed, but it will reduce the guaranteed death benefit and cash value of the policy until you pay it back. Loans from your life insurance policy will also accrue interest.

Does State Farm Life Insurance Offer Riders?

A life insurance rider is like an endorsement on an insurance policy that adds extra coverage options. State Farm Life Insurance offers one of the most comprehensive ranges of riders available covering all the bases for the add-ons you might need. Depending on the rider you choose to add, the rider can:

  • Give you added flexibility
  • Improve or increase coverage
  • Extend coverage to a family member
  • Protect your policy

List of State Farm Life Insurance Policy Riders

If you’re interested in purchasing a rider with your State Farm Policy, you have several options to choose from.

Level Term Rider

State Farm’s Joint Universal Life policy offers a Level Term Rider that lets you purchase additional term coverage on either insured until age 95. The coverage limit is a minimum of $100,000, and you must be between the age of 18 to 90 to be eligible for this rider. The Level Term Rider can also be converted to a whole life policy until the age of 75.

Waiver of Premium for Disability Rider

Waiver of Premium for Disability Riders are available for most State Farm policies. This option allows you to have your premiums waived if you become totally disabled prior to age 60 for as long as you remain totally disabled. This waiver has some specific conditions, so be sure and ask about the full details and how the option varies by age or depending on the plan you are on.

The Waiver of Monthly Deduction Rider is similar to the Waiver of Premium rider except that it waives the monthly deductions of the entire policy in the event of total disability. This rider is available on Universal and Joint Life Insurance policies.

Accidental Death Rider

The Accidental Death Rider is an option you can add that will allow the death benefit to be paid out as double, and in some cases triple, the amount of the normal death benefit if the cause of death is an accident.

Guaranteed Insurability Rider

The Guaranteed Insurability Rider lets you purchase an additional amount of insurance without a medical exam at specific “option ages” of 17, 22, 25, 28, 31, 34, 37, 40, 43, 46, and 49. You may also take the next available option when you get married or become a parent. This is available for people ages 0 to 37 for coverage levels of $25,000 to $100,000.  

This rider provides a nice way to lock in lower rates while you are healthy and increase coverage at the same rate without a medical exam when your family or personal needs grow. The only catch is that to take this rider, you also have to select the Waiver of Premium for Disability Rider.

Children’s Term Rider

The Children’s Term Rider can cover a child up until age 25 or until you turn 65 (whichever occurs first) for a limit of $5,000 to $20,000. The children’s rider is convertible without an additional medical exam into an individual life insurance policy for the child, valued up to five times the amount of the original rider under various conditions at age 18 and 25.

Flexible Care Benefit Rider 

The Flexible Care Benefit Rider is a way to get "living benefits" from your life insurance policy if you become critically ill. You can select to accelerate part of the death benefit and get payments every month if you are chronically ill and receiving long-term care services. This rider waives your monthly deductions during this period as well.

Payor Insurance Rider

Payor Insurance will waive your premiums on a children’s life insurance policy in the event you become disabled. The disability must occur before you reach age 60 and is in effect until the insured child reaches 25.

Estate Preservation Rider

The Estate Preservation Rider provides additional death benefits for the first four years of the Universal Life policy to help with certain tax planning situations. This rider is available to individuals ages 18 to 90 (18 to 78 in California).

Customer Service: Local Friendly Agents

State Farm works through local agents who can get to know you and help guide you with your State Farm insurance options. You can reach a local agent easily by phone during normal business hours, or by email.

You can use an agent from State Farm's nationwide network to get fast, friendly, personalized guidance.

Once you select an agent, this agent will become your representative and you will deal with them for all matters regarding your policy. Although State Farm does not have online chat help, it does offer online policy management, a blog, and web resources that are easy to understand. When we tested the company’s “speak to an agent now” phone number, we got connected to a local agent in a few minutes and received friendly and helpful service.

  • State Farm Life Insurance Company scores very well on the National Association of Insurance Commissioner’s (NAIC) National Complaint Index report, with a rating of 0.24. This rating has been consistently good for the past three years.

Customer Satisfaction: Among the Best

State Farm Life has a consistently strong track record of high scores in the J.D. Power Life Insurance Study, which ranks life insurance companies for customer experience and satisfaction. From 2015 to 2018, State Farm was awarded the top rank, and then again in 2020.

CategoryRank
Overall Satisfaction – Score 808Among the Best
Product OfferingsAmong the Best
PriceBetter than Most
StatementsBetter than Most
InteractionAmong the Best
CommunicationAmong the Best
Application and OrientationAbout Average

Waiver of Monthly Deduction for Disability Rider

Financial Strength: Highest Ranking A++ (Superior)

State Farm Life Insurance Company and State Farm Life and Accident Assurance Company (together referred to as State Farm Life) have a financial strength rating of A++ (Superior) by AM Best.

State Farm Cancellation Policy

State Farm requests that you contact your agent or send a request in writing if you want to cancel your policy. Ask about cancellation fees or procedures before you buy to have a good understanding of what to expect, especially if you want to know about cash values or surrendering your life insurance policy.

Price of State Farm Life Insurance

State Farm Life provides several payment options including monthly and yearly single pay plans and the option to pay premiums for either a limited number of years or up to age 100.

The Select Term rates state that the premiums will increase annually to age 95 but will never exceed the maximum premium stated in the policy.

Here are sample rates for $250,000 of term life coverage for a 25-year-old female in excellent health in Illinois:

Product (Years)Premium
Return of Premium (20 Years)Starting at $49.59 per month; $570.00 annually
Return of Premium (30 Years)Starting at $51.77 per month; $595.00 annually
Select Term (10 years)Starting at $15.02 per month; $172.50 annually
Select Term (20 years)Starting at $15.22 per month; $175.00 annually
Select Term (30 years)Starting at $19.14 per month; $220.00 annually

We reached out to five separate State Farm agents and the only one to respond to us was unwilling to give us quotes for whole life policies. You may find that getting a quote may be similarly difficult depending on the agents available in your area.

Even though their website offers dynamic quoting tools, don’t expect your premium to directly match the quote.

How State Farm Stacks Up to the Competition

We wanted to see how State Farm compared to the competition when it came to life insurance policies. After reviewing products and offerings from 25 life insurance companies, State Farm Life insurance is tough to compete within the areas of product offering, optional riders, or flexibility. Not only does the company offer traditional life insurance options, but it’s also one of the few insurance companies that offer a term life option with a cash value. State Farm also offers property insurance that may get you discounts for combined policies.

Final Verdict

State Farm Life Insurance is a good company that can offer you a lot of choices when it comes to buying life insurance. It also offers a full range of other insurance options like home and auto, some of which will give you discounts. 

The company’s website has a lot of resources but not a lot of interactivity. You will have to speak to an agent to get most types of policy quotes. Since State Farm works through captive agents, if you want to get a sense of what other insurance companies might offer you, consider shopping around for life insurance options or speak to a financial advisor to help you make a well-informed decision.

Methodology

All of our reviews of life insurance companies are based on extensive research and analysis of each company based on offerings, customer service, financial stability, cost, and more. For each company, we compared the life insurance products offered, as well as available features, and reported customer experiences. Visit our life insurance review methodology for the full breakdown of what we evaluated for over two dozen companies.

The Balance requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy .

  1. Better Business Bureau. "State Farm Insurance Company." Accessed Sept. 15, 2021.

  2. Insurance Information Institute. “What Are the Principal Types of Life Insurance?" Accessed Sept. 15, 2021. 

  3. National Association of Insurance Commissioners. "State Farm Life Ins Co National Complaint Index Report." Accessed Sept. 15, 2021.

  4. J.D. Power. "2020 JDPower US Home Insurance Study." Accessed Sept. 22, 2021.

  5. J.D. Power. "J. D. Power 2017 US Household Insurance Study." Accessed Sept. 22, 2021.

  6. J.D. Power. "J. D. Power 2016 US Household Insurance Study." Accessed Sept. 22, 2021.

  7. J.D. Power. "J. D. Power 2015 US Household Insurance Study." Accessed Sept. 22, 2021.

  8. AM Best. "AM Best Affirms Credit Ratings of State Farm Mutual Automobile Insurance Company and Most of Its Subsidiaries." Accessed Sept. 15, 2021.

Источник: https://www.thebalance.com/state-farm-life-insurance-review-4798629

Understanding vertical and horizontal compliance processes: A means to increased quality and reduced costs

Written by Joseph Wiest

compliance2

INTRODUCTION
Companies in the United States employ many processes in running their businesses.  Laws from various sources affect these processes, so that the processes and administration of them are specialized.  When company management does not acknowledge the need for common understanding and for specialization, the results are confusion, subsequent errors, and increased costs.

Being aware of the need for specialization assists in “knowing how to use and respond to language appropriately, given the setting, the topic, and the relationships among the people communicating.”[1]  Two specialists who are fluent in using and responding to the language of their specialty will comprehend each other.  The conversation between a specialist and a non-specialist may be fluent, but unless both parties use the language appropriately, they will not comprehend each other while two non-specialists conversing about a specialty may unknowingly lack both fluency and comprehension.

In regards to “compliance”, the word can be used to mean anything to do with laws, working with regulators, or even auditing.  To assure fluency and comprehension, “compliance” is used to mean abiding with the requirements of “laws”, i.e., constitutions, laws, statutes, regulations, court rulings, etc., promulgated by a governmental body with appropriate jurisdictional authority.

For property and casualty insurance companies[2], there are five major categories of laws to comply with:

  1. Federal economic sanctions
  2. Money, or financial matters
  3. Employees, or human resources issues
  4. The business of insurance, or operations
  5. Activities that support insurance operations

A discussion of compliance with federal economic sanctions and notable laws specific to insurance follows.  (The Appendix has a listing of laws that generally apply to financial, human resources, and business activities of all industries.)

FEDERAL ECONOMIC SANCTIONS COMPLIANCE
Federal economic sanctions apply to all United States citizens and businesses, arching over other compliance requirements.  The regulations enforced by the United States Treasury’s Office of Foreign Assets Control (OFAC) prohibit insurers from “engaging in [financial] transactions not licensed by OFAC that in any way involve”[3] individuals named on federal terrorist or narcotics trafficker lists or in certain countries[4] unless OFAC has pre-approved the transaction by issuance of a license.  This applies to insurance companies, brokers, business partners, and employees, and includes transactions such as collecting premium to issue a policy[5],[6] and paying a claim[7],[8].  Although OFAC has published risk matrices as guidance for financial services, charities, and securities firms to assess their risks in relation to compliance with the economic sanctions administered by OFAC,[9] no risk matrix has been published for the insurance industry.[10]

The next category of laws deals with financial issues affecting property and casualty insurance companies.  These laws are typically administered by a corporate finance department.

INSURANCE FINANCE COMPLIANCE
Insurance companies are expected to comply with laws addressing these financial matters.

  • Company Formation and Capitalization
  • Domiciliary jurisdiction – compliance with the business laws of the jurisdiction where the company is domiciled, filings with Secretary of State and capitalization requirements of insurance regulatory authority.
  • National Association of Insurance Commissioner’s (NAIC) Uniform Certificate of Authority Application (UCAA) – required filing of financial documents with a state’s insurance regulator to obtain a certificate of authority to sell insurance in a state.
  • SAP (Statutory Accounting Principles)
  • Solvency
  • Reinsurance
  • Guaranty Funds
  • Internal controls over financial reporting, including revisions to the Annual Financial Reporting Model Regulation (the Model Audit Rule)[11]
  • Reinsurance
  • Guaranty Funds
  • Premium Taxes (state, county, municipality)
  • Producer commission payments
  • Environmental Compliance – Insurers with direct written premium over $300 million must complete the Insurer Climate Risk Disclosure Survey to provide regulators and insurance consumers a method to “assess insurers’ risk assessment and management efforts” regarding climate change risks, focusing on insurer solvency and insurance availability and affordability.[12]  Twenty-one states require insurers to complete the survey.[13]

The next category addressed is compliance with laws regarding employers and employees.  These laws are typically administered by a staffing or human resources department.

INSURANCE HUMAN RESOURCES (HR) COMPLIANCE
Most of the laws that address how companies and employees interact apply to all industries.  There is a short list of laws that specifically apply to insurance companies.

  • Payroll Administration (requires interaction with Finance)
  • Commission payments – to company employees who are licensed and paid as producers
  • Violent Crime Control and Enforcement Act of 1994 (18 USC §§ 1033-34)

The discussion continues with a focus on compliance with laws specifically addressing the business of insurance.

INSURANCE OPERATIONS COMPLIANCE
Some laws, especially at the state level, affect only the business of insurance (operations) or only a specific type of insurance, such as auto or homeowners.  The major topics are:

  • Advertising/Marketing (Sales and Service)
  • Unfair Trade Practices Acts
  • Producer advertising materials
  • Risk Selection (Underwriting)
  • Declination
  • Rescission
  • Terminations
  • Initial Underwriting Period
  • Midterm Cancellation
  • Nonrenewal
  • Partial (policy modification to remove a coverage or impose a higher deductible)
  • Consumer Reports Used by Insurers
  • FCRA (Fair Credit Reporting Act, as amended by the FACT Act of 2003)
    • Permissible use
    •  Disposal
    •  Adverse use
  • Various laws restricting or prohibiting the use of credit information, including “freezes”
  • Acquisition and Retention (Sales and Service)
  • Assigned Risk (automobile) and Residual Markets (property Market Assistance Plan https://usacreditunion.us/map1.php, Fair Access to Insurance Requirements [FAIR] program, and Wind, Beach and Coastal Plans)
  • Rating – charging the same rate for the same risk, prohibited rating factors
  • Accounts Receivable (Customer Accounting)
  • Billing
  • Payment Posting
  • Refunds
  • Unfair Claims Practices Acts
  • Adjuster Licensing
  • Continuing Education
  • Notice to insurance regulators following “for cause” termination
  • Privacy – affects all operations processes (Most notably, state insurance privacy laws passed in response to the federal Gramm-Leach Bliley Act and the NAIC Model Insurance Information and Privacy Protection Act)
  • Notice of Information Practices
  • Opt Out provisions
  • Use and display of customers’ Social Security Numbers
  • Ensuring information collected from customers is secure from unauthorized access
  • Notifying customers in the event of a breach of security
  • Business Continuation/Disaster Recovery

These laws affect the major processes of insurance operations, which are:

  • Underwriting – risk acceptability selection and routine monitoring for continued acceptability
  • Sales and Service – acquisition of new business and retention of insureds
  • Billing – customer accounting or accounts receivable
  • Claims handling – settling claims based upon contractual language and facts of the loss

OPERATIONS SUPPORT PROCESSES
To support the major processes of insurance operations, insurers engage in at least six additional distinct processes.  None of these involve routine customer contact except complaint administration.

  1. A company is responsible to validate licenses and continuing education, to appoint, and to notify states when appointments are terminated for employees who are producers and adjusters.
  2. For companies that use agents or brokers to sell and service its insurance products, the insurer needs to administer contracts, commission payments, and business relationships with the agents and brokers.
  3. Product development and management works closely with actuarial services and with regulatory filings and handles:
  • The development of new policies, coverages, and endorsements and the maintenance of existing products
  • Ensuring that wording used by contracts, forms, endorsements, and general correspondence for use with customers meets all legal and business requirements
  • Production and maintenance of rate and form manuals for the use of employees who deal with customers
  • Release of new or revised rates, forms, etc., into production after all necessary filings have been approved

Companies sometimes establish one business area for the development of new products and another for the maintenance of existing products.

  1. Actuarial services supports product management by developing adequate and competitive rates for underwriting risks accepted by the company.  A company’s claims department relies on actuaries to develop loss reserves for probable future liabilities related to unpaid and incurred but not reported claims.
  2. Various laws require companies to file rates, forms, manuals, or data in response to new laws or changes in laws, when the company initiates changes to its products, or at the request of an insurance regulator.  The regulatory filings department administers this process. Filings must be made in specific formats and provide details about issues such as the purpose of the filing, premium affects upon insureds, and an actuarial memorandum that supports any rate changes.  Filing of data to fulfill regulator requests requires validation of the data accuracy to ensure the regulator is provided with reliable information. Various regulatory agencies at both the state- and federal-level require insurers to file periodic routine reports, such as a state law requiring insurers to notify the state department of transportation of vehicles no longer insured by the company or federal law requiring liability, no-fault, and workers’ compensation insurers to report payments made to Medicare beneficiaries to the Centers for Medicare and Medicaid Services (an agency of the Health and Human Services Department).[14]  Many states also require ad hoc reports, such as monthly updates regarding the numbers of claims presented and closed after a catastrophe.
  1. Consumer protection laws require companies to respond to and keep record of complaints.  Regulators thoroughly review complaint-tracking reports and/or directly review complaints when conducting market analysis and during market conduct examinations.

The next section addresses how a property and casualty insurer coordinates compliance with all of these laws by the establishment of various processes.

THE PROCESSES OF A PROPERTY AND CASUALTY INSURANCE COMPANY

VERTICAL PROCESSES. Project management refers to a process that drives the flow of knowledge as a “vertical process.”[15]  All of the insurance processes discussed above are vertical processes.  How they fit together is demonstrated in Table 1.

table1

Table 1 – Vertical Processes – Insurance Company

The laws affecting finance and HR issues to a large extent determine the processes within a company’s finance and HR departments.  Accordingly, the compliance process is often integrated within the finance and HR processes.  The finance and HR processes generally do not involve contact with customers.

Insurance operation processes provide service to insurance customers by directly interacting with customers.  The compliance process is either integrated in each of the operations and operations support processes or it may be centralized within a compliance department.  If centralized, the employees supporting the operations and operations support processes are able to fully focus on and maximize their skills directly related to their respective specialties.

INTEGRATED VERTICAL AND HORIZONTAL PROCESSES. Horizontal processes drive the flow of work[16] and integrate vertical processes into a coherent system.  Table 2 illustrates how an insurance company’s vertical and horizontal processes may be integrated and also displays the points of interaction between insurers and governmental authorities.  As was done with vertical processes, the discussion is limited to compliance with laws specific to insurance companies.  (The Appendix provides a discussion of the horizontal processes which are not specifically addressed by insurance laws.)

table2

Table 2 – General Business and Insurance Business Processes

A corporation’s entity type and method of capitalization form the foundation of its processes.  The requirements for an insurance company vary based on state insurance laws regarding formation as a stock company, mutual, reciprocal, etc., and whether capital funding is private or public.  State insurance laws require that insurance companies have a board of directors and company officers.  Company officers are responsible to develop and maintain business practices and procedures appropriate for the business.

To comply with new or changes to existing laws, an insurance company may need to alter its operations or operations support processes or periodically introduce new horizontal processes, such as privacy and security.  In addition, training and procedures may need to be changed.  Many states require insurance companies to develop plans for minimal disruption of service to its insureds in the event of a disaster.  Disaster recovery laws are an example of an insurance law that applies not only to the operations processes but financial and HR processes as well.  State insurance laws require companies to submit to regulatory examinations, with authority to require internal audits, and to participate in administrative hearings and arbitration.

How these vertical and horizontal processes interact is discussed next.

INTERACTION OF AN INSURANCE COMPANY’S PROCESSES

PARALLEL HORIZONTAL PROCESSES. The four major vertical processes of an insurance company – finance, human resources, operations, and operations support – are demonstrably different from each other, based distinctly upon the laws being complied with, the customers being supported, the different skills and aptitudes of employees, and the specialized professional certifications available to employees.  However, recognizing horizontal processes as separate and distinct may not be as evident.

For example, although compliance and auditing are parallel processes, and there are laws requiring a company to conduct audits, the two processes are distinct.  The compliance process focuses on the implementation of requirements from laws within the appropriate process or processes, while auditing focuses on the validation that these requirements were implemented properly, completely, and timely.  Therefore, a compliance process reacts to new laws and proactively drives changes to the company’s other processes to assure there are no gaps in compliance.  Conversely, auditing is a post-implementation process that proactively assesses the quality of the process being audited by validating whether processes are performing as expected and is reactive when non-compliance issues are uncovered.  Only when those conducting an audit are not the same persons who assisted in the development of compliant processes are the audit results are objective and independently verifiable.[17]

Another example of parallel horizontal processes is compliance (with laws) and adherence (to contracts and policies).  Governmental authorities establish laws and expect businesses to comply with those laws.  A company signing a contract with another company expects the other company to fulfill its contractual obligations by complying with the terms of the contact.  A company establishes its own policies and expects its employees to follow those policies consistently.  It is expected that laws will be complied with and contracts and policies adhered to.  With only the authority behind the requirements being different, the compliance and adherence processes are similar; however, even so, the scope of a compliance process is properly limited to requirements from laws.

INTERSECTING PROCESSES. To ensure the roles of a horizontal and vertical process that intersect remain separate, the interaction should be limited to the intersection point of the two processes.  When the interaction is not limited, those outside of the intersecting processes many times see the roles of the intersecting processes as similar and indistinct.  These examples will demonstrate the importance of establishing and maintaining separate roles for distinct processes.

Upon the identification of changes because of a new law or an amendment to an existing law, a compliance department is responsible to communicate those changes to the affected operations area.  A compliance department would notify the claims department of a new law that affects claims handling.  The claims department would then alter its processes as needed to comply.  In so doing, the two departments focus on their respective specialties – compliance and claims – and the compliance department would not start performing work that properly belongs to the claims department.

In regards to customer complaints, the role of the compliance department is to identify new laws or changes to laws addressing complaint handling and ensure that a compliant process for responding to complaints is in place.  Usually, either an operations support area or the operations area to which the complaint is addressed will respond to the complainant.  A compliance department would not have line authority over operations staff and would not be able to administer corrective or disciplinary action to the employees whose actions have caused the complaint.  Accordingly, the compliance department should not have responsibility for vertical processes such as responding to customer complaints.

Separate administration of all distinct processes focuses and limits the scope of responsibilities of all processes.  When distinct processes are combined, the distinctiveness of each becomes blurred, from the perspective of those familiar and those unfamiliar with the processes.  Blurred processes become inefficient and ultimately ineffective.  The result of maintaining distinct processes as separate processes is the maximization of efficiencies and effectiveness.

Specialized skills, knowledge, aptitude, and, in some cases, a professional license or designation are needed required to effectively handle the flow of knowledge within the finance, HR, operations, and operations support activities.  The availability of a professional certification or designation may be used as a straightforward method of distinguishing among processes.  If a certification or designation is available for a specialized function, then that function and the process supported by it are distinct from other specialized functions and warrants administration as a separate process.

ADMINISTRATION OF THE COMPLIANCE PROCESS
Insurance companies have several options when determining which of the company’s departments will administer compliance.  Many workable arrangements are possible that account for the complexities of general and insurance business laws, the multiple processes of any company, and the unique characteristics of individual companies.  The structure below is an example that shows compliance both as a separate process and systemically embedded.  In any configuration, hiring staff with the appropriate professional designations merits strong consideration.

  1. Dedicated staff supporting the specialized processes of finance, HR issues, and operations support are responsible for all of the compliance responsibilities associated with their specialized processes.
  2. An operations compliance manager supports all operations processes by identifying new compliance requirements for these operations.  In this arrangement, the operations functions each concentrate fully on their core processes.
  3. A corporate compliance department supports the business having:
    1. Oversight of the compliance process for the entire company.  To accomplish this, corporate compliance has authority with respect to compliance matters over the vertical processes of finance, HR, and operations, and operations support.
    2. Conducting the compliance process for laws that affect more than one horizontal process.  This will ensure that the integration of these laws throughout all processes is generally consistent.
  4. Both the corporate compliance and auditing functions report to the Audit Committee of the Board of Directors.  This will ensure board awareness and involvement in the separate parallel processes of compliance and auditing.
  5. The internal audit department, in addition to conducting audits to validate compliance, also audits for adherence to corporate policy. Additionally, based on the similar roles in post-compliance validation of audit and regulatory examinations, the internal audit department also supports regulatory examinations of the operations and operations support processes.  The company that has only one source that drive changes required due to regulatory examinations and internal audits.

This configuration covers the height and breadth of compliance for insurance companies; including horizontal processes such as corporate policies and auditing, and vertical processes of finance, HR, and operations.  The implementation of such an arrangement is one way to ensure that the company’s compliance process is holistic and systemic, which fosters fluency and comprehension between a company’s departments.  With strong reporting relationships in place, the company’s board of directors is assured that the board’s corporate governance responsibilities regarding compliance are fulfilled.

SUMMARY
Every business is obligated to comply with a variety of laws from state and federal legislatures, regulatory agencies, and courts.  Although states are the primary regulators of the business of insurance, some federal laws also affect the insurance industry, either directly or indirectly.  Laws that affect insurers can be general, specific to an activity, or specific to certain types of insurance policies.  To comply with changes to existing laws or new laws, companies must first be aware of the laws, regardless of the source, and then react to the laws.  The processes companies follow in reaction to changes to laws are part of a compliance process, which proactively makes changes to business processes for the company to remain compliant.

All processes can be categorized as either vertical or horizontal.  A vertical process drives the flow of knowledge while a horizontal process drives the flow of work.  Horizontal processes are necessary to link all vertical processes into a coherent system.  The effectiveness and efficiency of these links determines the effectiveness and efficiency of the business.  The availability of a certification or designation for a specialized function is a sound indication that a vertical or horizontal process is distinct from other processes and should be maintained and administered as a separate process.

In the insurance industry, companies have many choices in determining the best method of administering the compliance process.  A compliance process is often integrated within the finance, HR, and the various operations support processes.  Operations processes may also have integrated compliance or a centralized compliance process may support operations.  Each company’s compliance process should recognize both the company’s unique characteristics as well as the need the unique aspects of specialization within laws and the efforts taken to comply with specialized laws.  When done, this ensures that the company specialists are fluent in and comprehend both the legal requirements and the company’s processes, resulting in harmony instead of confusion, fewer errors and cost savings.  In turn, this provides assurance to the company’s directors that its corporate governance responsibilities regarding compliance are fulfilled.

APPENDIX


A.  VERTICAL PROCESSES – GENERAL BUSINESS COMPLIANCE ISSUES

1.  Finance Compliance[18]

  • Treasury Management[19]
  • Borrowing
  • Leasing
  • Investor relations
  • Collection
  • Disbursements
  • Short-term investing
  • Long term securities and equities
  • Risk Management
  • Employee Benefit Fund Management
  • SEC Oversight (limited to publicly traded companies) through the Securities Exchange Act
  • Financial reporting
  • Internal Accounting
  • GAAP (Generally Accepted Accounting Principles)
  • Auditing
    • Sarbanes-Oxley Act of 2002 (some provisions apply to both public and private companies)
    • Public Company Accounting Oversight Board (PCAOB) – auditing standards
    • USA PATRIOT Act
  • Tax reporting and tax filings (federal, state, local)
  • Bank relationship management
  • Payables – payroll (requires interaction with Human Resources), accounts payable
  • Budget and Financial Planning
  • Management Information Systems
  • Credit and Accounts Receivable
  • Electronic Funds Transfers
    • ACH (Automated Clearing House) Coding
  • External Auditor Relations

2.  HR Compliance[20]

  • Consumer Reports Used by Employers
  • FCRA (Fair Credit Reporting Act, as amended by the FACT Act of 2003)
  • Permissible use
  • Disposal
  • Adverse use
  • Discrimination Protections
  • ADA (Americans with Disabilities Act) and ADA Amendments Act of 2008
  • ADEA (Age Discrimination in Employment Act of 1967)
  •  Civil Rights Act of 1964
  •  Civil Rights Act of 1991
  • Equal Employment Opportunity Act
  • EEOC’s E-RACE Program (Eradicating Racism And Colorism from Employment)
  • Discrimination protections in connection with background checks
  • The Employee Polygraph Protection Act of 1988 – employers may not request or require applicants or discipline employees for declining to take a polygraph test
  • Family and Medical Leave Act
  • Genetic Information Nondiscrimination Act of 2008
  • OWBPA (Older Workers Benefit Protection Act)
  • Immigration Reform and Control Act of 1986 – employers may not discriminate against individuals based on national origin or citizenship
  • Sarbanes-Oxley Act of 2002, Whistleblower Protection
  • The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) – provides re-employment rights to military personnel and prohibits discrimination by employers
  • Health Benefits/Retirement
  • ERISA (The Employee Retirement Income Security Act of 1974)
  • Family and Medical Leave Act
  • Payroll Administration (requires interaction with Finance)
  • Internal Revenue Act
  • FLSA (Fair Labor Standards Act)
  • Tax reporting
  • Workplace Safety/Workplace Injuries
  • OSHA (Occupational Safety & Health Administration)
  • Workers’ Compensation Insurance
  • Release of Employees – Mass Layoff
  • Worker Adjustment and Retraining Notification (WARN) Act
  • Immigration Reform and Control Act of 1986 – only persons who are able to prove they are authorized to work in the United States may be hired by an employer

3.  General Business Compliance Issues

  • Telemarketing Sales Rules (”Do Not Call”) issued by the Federal Trade Commission or similar rules issued by a comparable state agency to protect the public from unwanted telemarketing
  • Patent, Copyright, Trademark, Servicemark, Patent and Trade Secret protections
  • Obtaining, Using, and Protecting Information
  • Gramm-Leach-Bliley Act
  • HIPAA (Health Insurance Portability and Accountability Act of 1996)
  • Products/Services Sold to Members of the U.S. Military
  • SCRA (The Servicemembers Civil Relief Act of 2003) and related state laws
  • Conducting Business Electronically
  • UETA (Uniform Electronic Transactions Act)
  • E-Sign (Electronic Signatures in Global and National Commerce)
  • Document Retention (Sarbanes-Oxley Act of 2002)

B.  HORIZONTAL PROCESSES – GENERAL BUSINESS COMPLIANCE ISSUES

1.  Corporate Governance Issues

The Sarbanes-Oxley Act requires publicly traded companies to have a corporate governance plan.  The New York Stock Exchange requires every company listed by the Exchange to have “certain standards regarding corporate governance,” regarding “corporate responsibility, integrity and accountability to shareholders.”[21]  Companies not listed by the Exchange may opt to develop corporate governance policies based on the Exchange’s standards to be modernistic, before going public, or because a lender requires it.

2.  Establishment of Various Corporate Policies and Departments

A board establishes an ethics policy to provide general oversight and direction for corporate behavior.  Corporate counsel serves as consultants for the company’s board and management with the development of corporate policies.  In addition to supporting policy formation, corporate counsel should be involved in nearly every aspect of the company’s processes, particularly all issues regarding laws and contracts.  Risk management is sometimes set up as a separate department with responsibility to identify and reduce exposure to all types of risks to the company.  A corporate compliance department may be established and have responsibility to administer the overall compliance process.  Counsel’s legal interpretation of risks and laws is supportive of the risk management and compliance processes.

A company’s ethics policy, or code of business conduct, often states that the company will comply with all known laws.  (The three largest P&C insurers in the United States from the 2011 Fortune 500 list[22] make a similar statement,[23] and others very likely do as well.)

Many companies form departments to administer contracts the company signs.  In support of risk management, the contract department should validate that all employees adhere to corporate policies in areas such as contractual data-sharing agreements.  A corporate training department may be formed.  Policies to address the topics of security of its employees, customers, premises, systems, and intellectual property may be established.  A corporate audit or internal audit department would be formed in part to validate that the company’s various processes are compliant with laws and adhere to corporate policies.  The company would also establish departments for computer processing and advertising and marketing.

REFERENCES


American International Group, “Code of Conduct” [http://www.aigcorporate.com/corpgovernance/Code_of_Conduct2010/AIGCodeOfConductEng.pdf].

Berkshire Hathaway Group, “Berkshire Hathaway Inc. – Code of Business Conduct and Ethics.”  [http://www.berkshirehathaway.com/govern/ethics.pdf].

CNN/Money Homepage, Fortune Magazine, “Fortune 500 2011” Rankings by “Industry: Insurance: P & C (stock)”, [http://money.cnn.com/magazines/fortune/fortune500/2011/industries/182/index.html] and (mutual) [http://money.cnn.com/magazines/fortune/fortune500/2011/industries/184/index.html].

Cornell University Law School, LII/Legal Information Institute, “UCC:  uniform commercial code”, [http://www.law.cornell.edu/ucc/1/].

Corporate Legal Times, “The Roundtable Sponsored by Littler Mendelson:  Compliance Matters – What Should You Be Doing to Build Better Compliance Policies?”,  September 2005:1,  [http://www.insidecounsel.com/pdfs/SeptRoundtable.pdf]

Department of Health and Human Services, “Mandatory Insurer Reporting:  Liability Insurance, Self-Insurance, No-Fault Insurance and Workers Compensation”, [http://www.cms.hhs.gov/MandatoryInsRep/03_Liability_Self_No_Fault_Insurance_and_Workers_Compensation.asp#TopOfPage].

The Institute of Internal Auditors, “International Standards for the Professional Practice of Internal Auditing”, [http://www.theiia.org/guidance/standards-and-guidance/ippf/standards/full-standards].

National Association of Insurance Commissioners, NAIC/AICPA Working Group, Financial Condition (E) Committee, “Model Audit Rule Revisions”, [http://www.naic.org/committees_e_naic_aicpa_wg.htm].

National Association of Insurance Commissioners, News Release “Insurance Regulators Adopt Climate Change Risk Disclosure”, [http://www.naic.org/Releases/2009_docs/climate_change_risk_disclosure_adopted.htm].

National Association of Insurance Commissioners, “Climate Change and Global Warming (EX) Task Force 2010 Fall National Meeting, Sunday, October 17, 2010, 5:00 – 6:00 p.m. Handout”.  [http://www.naic.org/documents/committees_ex_climate_101017_handout.pdf]

National Capital Language Resource Center (NCLRC).  “The Essentials of Language Teaching, Goal:  Communicative Competence”,  [http://www.nclrc.org/essentials/goalsmethods/goal.htm].

New York State Insurance Department, “Circular Letter No. 11 (2009),” “Compliance with the Federal Bank Secrecy Act, Foreign Corrupt Practices Act, and Office of Foreign Assets Control Requirements”, [http://www.ins.state.ny.us/circltr/2009/cl2009_11.htm].

New York Stock Exchange, “Final NYSE Corporate Governance Rules”, [http://www.nyse.com/pdfs/finalcorpgovrules.pdf].

New York Stock Exchange, “Listed Company Manual”, Section 301.00 Introduction, [http://www.nyse.com/Frameset.html?displayPage=/listed/1022221393251.html].

Securities and Exchange Commission.  Final Rule:  Revision of the Commission’s Auditor Independence Requirements, [http://www.sec.gov/rules/final/33-7919.htm].

Snider, Keith F., and Nissen, Mark E., “Beyond the Body of Knowledge:  A Knowledge-Flow Approach to Project Management Theory and Practice”, Project Management Journal, June 2003:  6.

State Farm Insurance Companies, “State Farm® Code of Conduct 2011“.  [http://www.statefarm.com/_pdf/2011-code-of-conduct.pdf

United States Department of Labor, Bureau of Labor Statistics, “Occupational Outlook Handbook, 2010-11 Edition,” “Financial Managers”, [http://www.bls.gov/oco/ocos010.htm].

United States Senate Committee on Banking, Housing, & Urban Affairs, “Brief Summary of the Dodd-Frank Wall Street Reform and Consumer Protection Act”.  [http://banking.senate.gov/public/_files/070110_Dodd_Frank_Wall_Street_Reform_comprehensive_summary_Final.pdf].

United States Department of the Treasury, “Civil Penalties Information Chart”.  “Enforcement Information for June 3, 2010”, [http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20100603_33.aspx] and “Enforcement Information for April 7, 2011”, [http://www.treasury.gov/resource-center/sanctions/CivPen/Documents/04072011.pdf].

United States Treasury, “Home/Resource Center/FAQs/Sanctions/Frequently Asked Questions and Answers.” [http://www.treasury.gov/resource-center/faqs/Sanctions/Pages/answer.aspx].

United States Treasury, Office of Foreign Assets Control, “Foreign Assets Control Regulations and the Insurance Industry”, April 29, 2004: 1, [http://www.ustreas.gov/offices/enforcement/ofac/regulations/t11facin.pdf].

United Stated Department of the Treasury, “Terrorism Sanctions:  What is Your OFAC Risk”, [http://www.treas.gov/offices/enforcement/ofac/programs/terror/terror.shtml].

ENDNOTES


[1] National Capital Language Resource Center (NCLRC).  “The Essentials of Language Teaching, Goal:  Communicative Competence.”  [http://www.nclrc.org/essentials/goalsmethods/goal.htm.]  Site accessed August 31, 2007.

[2] The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in 2010, established a Federal Insurance Office, which is authorized to gather information about the insurance industry and to monitor the insurance industry for systemic risk purposes.  This Act also established the Financial Stability Oversight Council.  The Council has authority to monitor non-bank financial institutions and it will recommend that the Federal Reserve assume regulatory authority for companies it deems systemically important.  United States Senate Committee on Banking, Housing, & Urban Affairs, “Brief Summary of the Dodd-Frank Wall Street Reform and Consumer Protection Act”.  [http://banking.senate.gov/public/_files/070110_Dodd_Frank_Wall_Street_Reform_comprehensive_summary_Final.pdf].  Site accessed June 1, 2011.  Because the affect of these federal actions is yet undetermined, no further discussion of these issues is made.

[3] United States Treasury, Office of Foreign Assets Control, “Foreign Assets Control Regulations and the Insurance Industry”, April 29, 2004: 1. [http://www.ustreas.gov/offices/enforcement/ofac/regulations/t11facin.pdf], site accessed March 6, 2006.  Although Sec. 326 of the USAPATRIOT Act (Customer Identification Program) does not apply to P&C insurers [see 31 CFR 103.16 (a) (4)], all businesses are required to check various government lists to confirm that there is no business activity with a Specially Designated National (SDN) or a Specially Designated Narcotics Trafficker (SDNTK).

[4] United States Treasury, “Home/Resource Center/FAQs/Sanctions/Frequently Asked Questions and Answers.” “At what point must an insurer check to determine whether an applicant for a policy is an SDN? If you receive an application from an SDN for a policy, you are under an obligation not to issue the policy.  Remember that when you are insuring someone, you are providing a service to that person.  You are not allowed to provide any services to an SDN. If the SDN sends a deposit along with the application, you must block the payment. [09-10-02].”  [http://www.treasury.gov/resource-center/faqs/Sanctions/Pages/answer.aspx], site accessed April 11, 2011.

[5] A commercial broker handling an insurance risk outside the United States remitted a penalty of $122,408 to OFAC in 2011 for allegedly providing commercial multi peril insurance policies for property located in a sanctioned country.

 [6] A property and casualty insurance company remitted a penalty of $11,000 to OFAC in 2011 for allegedly providing a personal automobile insurance policy without an OFAC license to an individual named as a SDNTK.

[7] A life insurance company remitted a penalty of $22,500 to OFAC in 2011 for allegedly mailing a death benefit claim payment to a sanctioned country in violation of OFAC regulations.

Endnotes 5, 6, and 7:  United States Department of the Treasury, “Civil Penalties Information Chart”.  Endnotes 4 and 6:  “Enforcement Information for April 7, 2011”, [http://www.treasury.gov/resource-center/sanctions/CivPen/Documents/04072011.pdf]; Endnote 5:  “Enforcement Information for June 3, 2010”, [http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20100603_33.aspx], sites accessed April 12, 2011.

[8] United States Treasury, “Home/Resource Center/FAQs/Sanctions/Frequently Asked Questions and Answers.” “Is it sufficient if my company screens life insurance policies only prior to policy issuance? . . . It also is important to screen the policyholder and beneficiary prior to paying a claim. (05-01-03)” [http://www.treasury.gov/resource-center/faqs/Sanctions/Pages/answer.aspx], site accessed April 11, 2011.

[9] United Stated Department of the Treasury, “Terrorism Sanctions:  What is Your OFAC Risk”, [http://www.treas.gov/offices/enforcement/ofac/programs/terror/terror.shtml], site accessed April 11, 2009.

 [10] However, the New York state insurance department issued a circular letter stating its expectations that insurance companies will abide by the requirements of OFAC and two other federal laws that do not explicitly apply to the business of insurance.  State of New York Insurance Department, “Circular Letter No. 11 (2009),” “Compliance with the Federal Bank Secrecy Act, Foreign Corrupt Practices Act, and Office of Foreign Assets Control Requirements,” June 29, 2009, [http://www.ins.state.ny.us/circltr/2009/cl2009_11.htm].  The requirements of the Bank Secrecy Act apply to “covered products,” the features of which are not generally underwritten by P&C companies.  The requirements of the Foreign Corrupt Practices Act apply to U.S. companies that do business with officials of foreign governments.  Site accessed July 26, 2009.

[11] National Association of Insurance Commissioners, NAIC/AICPA Working Group, Financial Condition (E) Committee, “Model Audit Rule Revisions,” [http://www.naic.org/committees_e_naic_aicpa_wg.htm], site accessed July 26, 2009.

[12] National Association of Insurance Commissioners, News Release “NAIC Adopts New Climate Risk Disclosure Survey,” March 28, 2010.  [http://www.naic.org/Releases/2010_docs/NAIC_adopts_new_climate_survey.htm], site accessed March 29, 2010.

[13] National Association of Insurance Commissioners, “Climate Change and Global Warming (EX) Task Force 2010 Fall National Meeting, Sunday, October 17, 2010, 5:00 – 6:00 p.m. Handout”.  [http://www.naic.org/documents/committees_ex_climate_101017_handout.pdf], site accessed April 10, 2011.

[14] Department of Health and Human Services, “Mandatory Insurer Reporting:  Liability Insurance, Self-Insurance, No-Fault Insurance and Workers Compensation”, [http://www.cms.hhs.gov/MandatoryInsRep/03_Liability_Self_No_Fault_Insurance_and_Workers_Compensation.asp#TopOfPage], site accessed April 22, 2009, and [http://www.cms.hhs.gov/MandatoryInsRep/04_Whats_New.asp], site accessed March 20, 2010.

[15] Keith F. Snider and Mark E. Nissen, “Beyond the Body of Knowledge:  A Knowledge-Flow Approach to Project Management Theory and Practice”, Project Management Journal, June 2003:  6.

[16] Snider and Nissen:  6.

[17] Auditor independence is a requirement with respect to financial audits of publicly traded companies via rules of the Securities and Exchange Commission.  See 17 CFR Parts 210 and 240 [http://www.sec.gov/rules/final/33-7919.htm].  Additionally, in the “International Standards for the Professional Practice of Internal Auditing”, The Institute of Internal Auditors state:  “The internal audit activity must be independent, and internal auditors must be objective in performing their work.”  [http://www.theiia.org/guidance/standards-and-guidance/ippf/standards/full-standards], both sites accessed December 29, 2009.

[18] Many of these activities are affected by a state’s adoption of the Uniform Commercial Code (UCC)[18], which seeks to standardize interstate commercial transactions.  [18]Cornell University Law School, LII/Legal Information Institute, “UCC:  uniform commercial code”, [http://www.law.cornell.edu/ucc/1/], accessed May 15, 2011.

[19] United States Department of Labor, Bureau of Labor Statistics, “Occupational Outlook Handbook, 2010-11 Edition,” “Financial Managers”, [http://www.bls.gov/oco/ocos010.htm], accessed December 24, 2009.  The typical duties of a treasurer and controller were obtained from this Handbook.

[20] Corporate Legal Times, “The Roundtable Sponsored by Littler Mendelson:  Compliance Matters – What Should You Be Doing to Build Better Compliance Policies?”  In “the average corporation, a third of compliance falls in labor and employment law.” September 2005:1.  [http://www.insidecounsel.com/pdfs/SeptRoundtable.pdf], site accessed April 25, 2006.

[21] New York Stock Exchange, “Listed Company Manual”, Section 301.00 Introduction, [http://www.nyse.com/Frameset.html?displayPage=/listed/1022221393251.html], site accessed March 18, 2006.

[22] CNN.com, The Internet Home of Fortune, “Fortune 500 2011” Rankings by “Industry: Insurance: P & C (Stock), [http://money.cnn.com/magazines/fortune/fortune500/2011/industries/182/index.html and Mutuals [http://money.cnn.com/magazines/fortune/fortune500/2011/industries/184/index.html, sites accessed May 10, 2011.

[23] 1. Berkshire Hathaway Group, “Berkshire Hathaway Inc. – Code of Business Conduct and Ethics.”  [http://www.berkshirehathaway.com/govern/ethics.pdf], site accessed May 10, 2011.

2. American International Group, “Code of Conduct” [http://www.aigcorporate.com/corpgovernance/Code_of_Conduct2010/AIGCodeOfConductEng.pdf], site accessed May 10, 2011.

3. State Farm Insurance Companies, “State Farm® Code of Conduct 2011“.  [http://www.statefarm.com/_pdf/2011-code-of-conduct.pdf], site accessed May 10, 2011.


Joseph L. Wiest, CPCU, ARC, ACP, is a corporate compliance director of market conduct with a top ten P&C insurance group.  He is a graduate of the University of Nebraska, having earned a B.S. in business administration. Since 1984, he has been employed in the insurance industry, working 20 years for a major personal lines direct writer, holding positions in customer service, line underwriting, staff underwriting, and compliance.  He also served as the compliance officer of a nonstandard auto carrier for two years.  He has earned a business ethics certificate from Colorado State University in addition to nine other professional insurance designations.

Tags: Business Process Improvement, Compliance, Operational Excellence, Organizational Alignment

Источник: https://www.perrknight.com/2011/07/06/understanding-vertical-horizontal-compliance-processes-means-increased-quality-reduced-costs/

Methods of Payment

Don’t lose potential business to competitors by overlooking different payment options which could be attractive to your international buyer. Explore several payment methods and find the one best suited to your needs.

Many American businesses new to selling U.S. products overseas expect or prefer to be paid in full in advance. While there is zero risk of non-payment if you do business this way, you risk losing business by overlooking competitors willing to offer buyers better payment options. Consider more attractive payment methods as outlined in this article and accompanying videos.

Methods of Payment

To succeed in today’s global marketplace and win sales against foreign competitors, exporters must offer their customers attractive sales terms supported by the appropriate payment methods. Because getting paid in full and on time is the ultimate goal for each export sale, an appropriate payment method must be chosen carefully to minimize the payment risk while also accommodating the needs of the buyer. As shown in figure 1, there are five primary methods of payment for international transactions. During or before contract negotiations, you should consider which method in the figure is mutually desirable for you and your customer.

Payment Risk Diagram

Key Points

  • International trade presents a spectrum of risk, which causes uncertainty over the timing of payments between the exporter (seller) and importer (foreign buyer).
  • For exporters, any sale is a gift until payment is received. 
  • Therefore, exporters want to receive payment as soon as possible, preferably as soon as an order is placed or before the goods are sent to the importer.
  • For importers, any payment is a donation until the goods are received.
  • Therefore, importers want to receive the goods as soon as possible but to delay payment as long as possible, preferably until after the goods are resold to generate enough income to pay the exporter.

Cash-in-Advance

With cash-in-advance payment terms, an exporter can avoid credit risk because payment is received before the ownership of the goods is transferred. For international sales, wire transfers and credit cards are the most commonly used cash-in-advance options available to exporters. With the advancement of the Internet, escrow services are becoming another cash-in-advance option for small export transactions. However, requiring payment in advance is the least attractive option for the buyer, because it creates unfavorable cash flow. Foreign buyers are also concerned that the goods may not be sent if payment is made in advance. Thus, exporters who insist on this payment method as their sole manner of doing business may lose to competitors who offer more attractive payment terms. Learn more about Cash-in-Advance.

Letters of Credit

Letters of credit (LCs) are one of the most secure instruments available to international traders. An LC is a commitment by a bank on behalf of the buyer that payment will be made to the exporter, provided that the terms and conditions stated in the LC have been met, as verified through the presentation of all required documents. The buyer establishes credit and pays his or her bank to render this service. An LC is useful when reliable credit information about a foreign buyer is difficult to obtain, but the exporter is satisfied with the creditworthiness of the buyer’s foreign bank. An LC also protects the buyer since no payment obligation arises until the goods have been shipped as promised. Learn more about Letters of Credit.

Documentary Collections

A documentary collection (D/C) is a transaction whereby the exporter entrusts the collection of the payment for a sale to its bank (remitting bank), which sends the documents that its buyer needs to the importer’s bank (collecting bank), with instructions to release the documents to the buyer for payment. Funds are received from the importer and remitted to the exporter through the banks involved in the collection in exchange for those documents. D/Cs involve using a draft that requires the importer to pay the face amount either at sight (document against payment) or on a specified date (document against acceptance). The collection letter gives instructions that specify the documents required for the transfer of title to the goods. Although banks do act as facilitators for their clients, D/Cs offer no verification process and limited recourse in the event of non-payment. D/Cs are generally less expensive than LCs. Learn more about Documentary Collections.

Open Account

An open account transaction is a sale where the goods are shipped and delivered before payment is due, which in international sales is typically in 30, 60 or 90 days. Obviously, this is one of the most advantageous options to the importer in terms of cash flow and cost, but it is consequently one of the highest risk options for an exporter. Because of intense competition in export markets, foreign buyers often press exporters for open account terms since the extension of credit by the seller to the buyer is more common abroad. Therefore, exporters who are reluctant to extend credit may lose a sale to their competitors. Exporters can offer competitive open account terms while substantially mitigating the risk of non-payment by using one or more of the appropriate trade finance techniques covered later in this Guide. When offering open account terms, the exporter can seek extra protection using export credit insurance.

Consignment

Consignment in international trade is a variation of open account in which payment is sent to the exporter only after the goods have been sold by the foreign distributor to the end customer. An international consignment transaction is based on a contractual arrangement in which the foreign distributor receives, manages, and sells the goods for the exporter who retains title to the goods until they are sold. Clearly, exporting on consignment is very risky as the exporter is not guaranteed any payment and its goods are in a foreign country in the hands of an independent distributor or agent. Consignment helps exporters become more competitive on the basis of better availability and faster delivery of goods. Selling on consignment can also help exporters reduce the direct costs of storing and managing inventory. The key to success in exporting on consignment is to partner with a reputable and trustworthy foreign distributor or a third-party logistics provider. Appropriate insurance should be in place to cover consigned goods in transit or in possession of a foreign distributor as well as to mitigate the risk of non-payment.

Источник: https://www.trade.gov/methods-payment

Transitioning from an Intermediate Small Bank to a Large Bank Under the Community Reinvestment Act

By Rebecca Zirkle White, Senior Examiner, Federal Reserve Bank of Richmond

A bank’s transition under the Community Reinvestment Act (CRA) from an intermediate small bank (ISB) to a large bank may seem challenging at the onset because of differences between the large and ISB evaluation standards. For example, a large bank must begin collecting and reporting data for small business, small farm, and community development loans1 in the year in which it meets the CRA definition of large bank. The following year, it will be subject to the large bank CRA examination procedures, which include separate tests for lending, investments, and services. To help facilitate the transition, this article discusses ways for an ISB to anticipate the changes, develop an appropriate strategy, and enlist the aid of personnel across the institution to ensure a successful transition to the large bank examination procedures.

Transitioning to a Large Bank Under CRA

An institution is no longer considered an ISB when its assets equal or exceed the upper asset size threshold for small banks (which includes ISBs), as of December 31 for both of the prior two years.2 The small bank threshold equals $1.202 billion for 2014 and is adjusted annually.3

When an institution transitions from an ISB, it must immediately begin collecting loan data that will be reported in the following calendar year, consistent with standards provided for in Section 42 of Regulation BB and detailed later in this article. The institution will not be subject to the large bank examination procedures until one full calendar year after it ceased being an ISB (that is, until it has collected a full year of loan data subject to large bank CRA collection). Anticipating and understanding the requirements of a large bank before becoming one are critical to a successful transition.

Overview of the ISB Evaluation Process

Before discussing the standards for evaluating a large bank under CRA, it is helpful to review the ISB standards to highlight the differences. For an ISB, CRA performance is evaluated under the small bank lending and community development tests. The lending test evaluates the bank’s loan-to-deposit ratio, the percentage of lending in the bank’s assessment areas, the distribution of lending to borrowers with different incomes and revenues, and the distribution of loans in geographies of different income levels. See 12 C.F.R. §228.22(b). The streamlined lending test for small banks also considers an institution’s record of taking action in response to written complaints about its performance in helping to meet the credit needs in its assessment area(s). The community development test considers activities that meet the definition of community development as it is discussed in the next section of this article. In particular, the test considers the number and amount of community development loans and qualified investments,4 the extent of community development services, and the responsiveness through these activities to community development needs. Because both tests are weighted equally, a bank must receive at least a satisfactory rating for both the lending and community development tests to receive an overall satisfactory rating; a less than satisfactory rating for either test will result in an overall less than satisfactory CRA rating.

Community Development

Community Development is one aspect of the CRA examination that does not change when a bank becomes a large bank. Community development is defined in Regulation BB. See 12 C.F.R. §228.12(g). External Link Additional guidance is included in the Interagency Questions and Answers Regarding Community Reinvestment (Interagency Q&As).5 The term community development includes:

  • Affordable housing for low- and moderate-income (LMI) individuals
  • Community services targeted to LMI individuals
  • Activities that promote economic development by financing small businesses or small farms
  • Activities that revitalize or stabilize LMI geographies, designated disaster areas, and distressed or underserved nonmetropolitan middle-income geographies
  • Activities that support the Neighborhood Stabilization Program6

With limited exceptions, community development loans, qualified investments, and community development services that are considered as community development activities under an ISB CRA evaluation will continue to qualify under a large bank CRA evaluation with two key differences. First, large banks will not have the flexibility to have certain home mortgage, small business, or small farm loans that meet the regulatory definition of community development as community development loans.7 For large banks, these loans will be reported and will be considered under the retail portion of the lending test. Second, community development activities will be evaluated under different performance tests (the lending, investment, and service tests) instead of being evaluated together under one community development test.

Data Collection and Reporting for Large Banks

One significant new obligation for a bank transitioning from an ISB to a large bank is the requirement under 12 C.F.R. §228.42 to collect information about the small business, small farm, and community development loans it originates or purchases and to report this data annually to its CRA federal regulator. Anticipating the need to collect these loan data will help ensure a smooth transition, including establishing appropriate processes and systems to comply with this requirement. A recommended practice is to begin planning for data collection before the bank exceeds the small bank threshold on December 31 of the two consecutive years because the data collection requirement is effective when a bank crosses the large bank threshold. The Federal Finance Institutions Examination Council provides many resources, including instructional guides and free data entry software, to assist banks with data collection. These resources can be found at www.ffiec.gov. External Link

As detailed in the CRA regulation and guidance included in the Interagency Q&As, the collection of data for small business loans is limited to loans whose original amounts were $1 million or less and were reported as either “loans secured by nonfarm or nonresidential real estate” or “commercial and industrial loans” in Part I of the Report of Condition and Income (Call Report).8 A small farm loan must be reported if the original amount was for $500,000 or less, and if it was reported under either “loans to finance agricultural production and other loans to farmers” or “loans secured by farmland” in Part I of the Call Report.9 The annual revenue of a business or farm does not affect the small business or small farm classification.

As detailed in the table below, four key pieces of information must be collected for each individual small business or small farm loan.

  • A unique number or alphanumeric symbol to identify the relevant loan file
  • The loan amount at origination
  • The loan location (MSA or MD,10 state, county, and census tract)
  • An indicator whether the loan was to a business or farm with gross annual
  • revenues of $1 million or less11

Data must be reported in the aggregate. Specifically, for each geography in which the reporter originated or purchased a small business or small farm loan, the aggregate number and amount of loans in the following categories must be reported:

  • with an amount at origination of $100,000 or less;
  • with an amount at origination of more than $100,000 but less than or equal to $250,000;
  • with an amount at origination of more than $250,000; and
  • to businesses and farms with gross annual revenues of $1 million or less (using the revenues that the bank considered in making its credit decision).

Data collection is one of the key actions a bank must take during the one-year lag period before it is subject to the large bank examination procedures. When the CRA data are collected for any year, the aggregated CRA data must be reported in the required format by March 1 of the following year.12 Examination staff will use small business and small farm loan data when evaluating a bank’s performance under the lending test.

In addition to reporting small business and farm loans, large banks must report community development loans. However, this data reporting is more limited because only the aggregate number and aggregate amount of community development loans originated or purchased during the prior year are reported.13 A bank that elects to have its CRA examiners consider community development loans by a consortium or third party must report the data the bank would have reported had the loans been originated or purchased by the bank.

If a large bank is subject to the Home Mortgage Disclosure Act (HMDA) reporting rules, it must report additional mortgage data for CRA purposes. Specifically, the location of each home mortgage loan application, origination, or purchase outside the MSAs in which the bank has a home or branch office (or outside any MSA) must also be reported in accordance with the regulatory requirements. This information must be included in the loan application register. See C.F.R. §1003.4(e).

Furthermore, a large bank has the option to collect and maintain (but not report) consumer loan data for consumer loans originated or purchased during a calendar year. Categories of consumer loans for which a bank may collect data include motor vehicle, credit card, home equity (if not reported under the HMDA), other secured, and unsecured.14 Banks may collect information for one or more of the categories, but if a bank chooses to collect data for loans in a certain category, it must collect data for all loans originated or purchased in that category. The consumer loan data to be collected, if a bank chooses to do so, mirrors the data requirements for small business and small farm loan collection: a unique identifier for each loan, loan amount at origination or purchase, loan location, and gross annual income of the consumer that the bank considered in making its credit decision. These data should be provided to examination staff for consideration in the bank’s CRA evaluation.

Section 228.22(c) additionally provides that, at a bank’s option, loans by an affiliate of the bank will be considered if the bank provides data on the affiliate’s loans pursuant to §228.42. A bank that elects to have loans by an affiliate considered shall collect, maintain, and report for those loans the data that the bank would have collected, maintained, and reported had the loans been originated or purchased by the bank. For home mortgage loans, the bank shall also be prepared to identify the home mortgage loans reported under Regulation C by the affiliate.

In particular, CRA Q&A ___.22(c)(2)(i)—1PDFExternal Link provides that an institution may elect to have loans by its affiliate(s) considered. The bank may elect to have all or only certain categories of the following types of loans considered: home mortgage loans, small business loans, small farm loans, community development loans, and the five categories of consumer loans mentioned previously.

Further, Q&A ___.22(c)(2)(i)—1PDFExternal Link explains rules that prohibit an affiliate from claiming a loan origination or loan purchase when another institution claims the same loan origination or purchase. Additionally, Q&A ___.22(c)(2)(ii)—1 prohibits “cherrypicking” within any particular category of loans by providing that when an institution elects to have considered loans within a particular lending category made by one or more of the institution’s affiliates in a particular assessment area, all loans made by all of the institution’s affiliates within that lending category in that particular assessment area must be considered.

Large Bank Evaluations

The large bank CRA performance standards include three tests, lending, investment, and service, which are discussed in greater detail below. Unlike the ISB evaluation method, in which the lending and community development tests are weighted equally in determining the institution’s overall CRA rating, the large bank lending test receives greater weight than either the investment or service tests in determining the overall rating. The investment and service tests are weighted equally. The table below shows the weight assigned for each rating under each test.

Component Test Ratings

Points for Lending

Points for Investment

Points for Service

Outstanding

12

6

6

High Satisfactory

9

4

4

Low Satisfactory

6

3

3

Needs to Improve

3

1

1

Substantial Noncompliance

0

0

0

An institution rated outstanding for the lending test will receive an overall rating of at least satisfactory.15 Alternatively, an institution that receives a rating of less than satisfactory for the lending test will receive an overall rating of less than satisfactory16 regardless of the ratings of the investment and service tests.

The following table illustrates how the sum of the component test rating scores translates to the assignment of the overall CRA rating.

Composite Rating

Points Needed

Outstanding

20 or more

Satisfactory

11 through 19

Needs to Improve

5 through 10

Substantial Noncompliance

0 through 4

Lending Test

The lending test components for a large bank CRA evaluation differ from those for an ISB evaluation. For a large bank, two ISB lending test factors are eliminated: the loan-to-deposit ratio and the institution’s responsiveness to written complaints about its performance in meeting the credit needs in its assessment area(s). Conversely, two new elements are introduced for the large bank lending test:

  • Lending Activity — lending activity considers a bank’s responsiveness to credit needs in its assessment area(s), taking into account the number and amount of home mortgage, small business, small farm, and consumer loans, if applicable, in its assessment area(s).
  • Innovative and Flexible Lending Practices — a bank’s use of innovative and flexible lending practices in a safe and sound manner to address the credit needs of LMI individuals or geographies is a qualitative consideration when assessing the success and effectiveness of the bank’s lending.17

However, the most significant difference between the ISB lending test and the large bank lending test involves community development lending. The first change involves qualitative considerations when evaluating community development loans. While the regulatory definition of community development is unchanged, community development loans are no longer grouped with investments and services under a broad community development test but are considered as a component under the large bank lending test. Community development loans are evaluated based upon the number and dollar amount of such loans as well as their complexity and innovativeness. These last two criteria add additional qualitative dimensions to the evaluation of a large bank’s performance and may augment performance under the quantitative criteria of the lending test.18

Another significant difference involving community development loans is the removal of the ISB option to treat certain small business, small farm, or mortgage loans as community development loans. As previously discussed, when an ISB does not report mortgage, small business, or small farm loan data, it can choose, on an individual loan basis, to have any of these types of loans that meet the definition of community development treated as community development loans. Upon this election, these loans are considered under the community development test and cannot also be considered under the ISB lending test.

This option is not available to large banks, even when the large bank does not report mortgage loan data. With one exception, loans that would need to be reported under Regulation C, if the large bank were required to collect and report such loans, cannot be treated as community development loans. The only exception is for multifamily housing loans that have a community development purpose. Whether reported or not, such a loan can be considered both a community development loan and a mortgage loan under the large bank lending test. Since large banks must report community development loans, it is critical that such loans be identified both to meet this technical reporting requirement and to ensure such loans are properly evaluated as part of the lending test.

Successfully identifying community development loans will typically require the involvement of loan officers or loan administration personnel because these staff members are often in the best position to identify when a loan meets the definition of community development. Staff training, checklists to establish when loans have a community development purpose, and strong collaboration between lending staff and bank staff responsible for reporting community development loans can help to ensure such loans are properly identified and reported.

The remaining elements of the lending test for a large bank evaluation are unchanged from the ISB evaluation process and focus on an analysis of the bank’s major loan products. Loans reviewed will include small business, small farm, and loans reported under the HMDA although, based upon a bank’s distinctive lending profile, other types of loans may be reviewed. Assessment area concentration measures the proportion of loans originated inside the bank’s delineated assessment area(s). Additionally, within the bank’s assessment area(s), the geographic distribution of lending in geographies of different income levels and the distribution of lending to borrowers with different incomes or revenues continue to be considered under a large bank CRA evaluation. The table below summarizes the lending test similarities and differences for large banks and ISBs.

Lending Test Component

Large Bank Lending Test19

ISB Lending Test20

Loan-to-Deposit Ratio

No

Yes

Lending Activity

Yes

No

Assessment Area Concentration

Yes

Yes

Geographic Distribution of Loans

Yes

Yes

Lending Distribution Based upon Borrower Characteristics (Income or Revenue)

Yes

Yes

Community Development Lending

Yes

No — but included in Community Development Test

Innovative or Flexible Lending Practices

Yes

No

Response to Written Complaints About Performance in Meeting the Credit Needs of Assessment Area(s)

No

Yes

Investment Test

The investment test can present challenges for an ISB transitioning to large bank status. Interagency Q&A ___.26(c)—1PDFExternal Link explains that an ISB has the flexibility to allocate its resources among community development loans, qualified investments, and community development services in amounts that it reasonably determines are most responsive to community development needs and opportunities.

Large banks are evaluated under separate lending, investment, and service tests, which include expectations for community activities under each test. It is important for a large institution, or an institution that is approaching large bank status, to recognize the increased regulatory expectations and to plan accordingly. A bank that has not planned properly may discover too late that its level of participation in qualified community development investments is insufficient to achieve a satisfactory rating under the investment test.

Qualified investments must benefit one or more of a bank’s assessment areas or a broader statewide or regional area that includes the bank’s assessment area(s).21 Factors considered under the large bank investment test include:

  • dollar amount of community development investments including grants;
  • complexity and innovativeness of qualified investments;
  • responsiveness of qualified investments to area needs; and
  • degree to which qualified investments are not routinely provided by private investors.

All of these elements are considered when reviewing performance. Complexity, innovativeness, and the degree to which qualified investments are not routinely provided by private investors are all factors under the large bank investment test that are not included in the ISB community development test. These specific criteria permit an examiner to qualitatively weight certain investments differently or to make other appropriate distinctions when evaluating an institution’s record of making qualified investments. Banks should consider both quantitative and qualitative factors, in the context of safety and soundness, when weighing their investment choices. Ultimately, the investment test rating measures an institution’s responsiveness to community needs relative to available opportunities.22

Many institutions find that assistance from the chief financial officer or investment officer is critical to identify qualified investments or investment opportunities. Beyond the purchase of a qualified investment, documentation of the community development benefits of the investment is important. Documenting the purpose of the investment, through the prospectus or other relevant documents, the geographic area benefiting from the investment, and any qualitative elements will help both bank staff monitoring CRA performance and examination staff conducting the CRA evaluation.

Service Test

The service test for large banks generally does not present transition issues. It has two components: retail services and community development services. While an ISB evaluation considers community development services, the retail services component is specific to the large bank CRA examination process and focuses on the location of branch offices and their operations. The distribution and accessibility of branch offices to LMI areas and persons are considered along with the opening or closing of any branch locations, particularly in LMI geographies. Alternative delivery methods, including ATMs and mobile banking, are also considered. Finally, the range of services provided in geographies with different income levels and the degree to which the services are tailored to meet local needs are part of the performance evaluation.23

Under the community development services component of the large bank service test, CRA consideration is given to services with a community development purpose that are related to the “provision of financial services.”24 Both requirements must be satisfied. In general, activities that use employees’ financial expertise as related to banking meet the definition of a community development service.25 Activities may result from serving on the board of directors of a community development organization or by providing financial expertise through volunteer activities. Qualified community development services are reviewed for the extent to which community development services are provided and the innovativeness and responsiveness of the services to area needs.26

Identifying and documenting qualified services may be best accomplished through a bankwide effort that engages staff across the organization. Some institutions have had success capturing community development services through the use of an internal form to document qualified activities. The form may be structured as a survey completed by staff members. The forms are periodically submitted to or aggregated by the CRA officer or other responsible staff to verify that the activities submitted qualify. An effective process will identify the nature of the service provided, any partner organizations involved, targeted beneficiaries of the service, and dates.

Conclusion

With a clear strategy and proper preparation, banks transitioning from ISB performance standards to large bank performance standards can successfully navigate the differences between the two CRA evaluation methods. Enlisting the aid of bank personnel across different departments, including lending, finance, and retail administration, can facilitate the transition process, and engaging such staff on an ongoing basis can help sustain success.

Specific issues and questions should be raised with your primary regulator.

Источник: https://consumercomplianceoutlook.org/2014/fourth-quarter/transitioning-from-intermediate-small-bank-to-large-bank-under-cra/

State Farm rebrands with less disastrous message

In a major rebranding, State Farm has unveiled a new ad campaign that shifts focus from insurance against accidents to financial planning. One ad features a boy on a bike miraculously weaving through traffic.

For 45 years, State Farm has pitched itself as the "good neighbor" who stands by you when things go wrong.

In a major rebranding, State Farm unveiled a new campaign that shifts focus from insurance against misfortune to the company's more proactive services — everything from funding college to planning for retirement.

Gone is the 5-year-old "Get to a Better State" campaign, where State Farm agents rescue customers from buffalo attacks, car accidents and other disasters.

The new tagline is: "Here to Help Life Go Right."

"We've always been there when things go wrong, but people don't realize the many ways that we've been here to help life go right," said Beth Ward, assistant vice president of marketing for Bloomington-based State Farm. "We've got banking products, life insurance products and other things that can also help enable those dreams."

Created by longtime State Farm ad agency DDB Chicago, the campaign launched Thursday with a television spot during the first game of the NBA Finals. The commercial opens with ominous scenes that play out well. Tornadoes give way to rainbows, fires spontaneously extinguish and a boy on a bike miraculously weaves through traffic. A youthful voice ponders what a State Farm agent would do in a world where nothing went wrong.

The answer? Sell you assorted financial services.

"Insurance is always going to be known as when the bleep hits the fan, they're there for you in the worst times," said John Maxham, chief creative officer of DDB. "What State Farm would like people to know is there is another side to life and another side to them, and with a little bit of planning they can help create better outcomes."

DDB Chicago, under its predecessor Needham, Harper & Steers, created the iconic "Like a Good Neighbor" slogan for State Farm in 1971, with a jingle written by pop star Barry Manilow. It has endured and remains a "part of (the company's) DNA," according to Ward. But the slogan is nowhere to be found in the new commercial, with just a faintest nod to the jingle.

The last four notes of the jingle sound at the end of the 60-second spot, corresponding with the unsung lyrics "State Farm is there."

State Farm spent $484 million on measured media in the U.S. last year, according to Kantar Media. The company plans to be "aggressive" with the new campaign, which will include online, direct mail and other advertising platforms, in addition to TV commercials.

Ward said State Farm remains an insurance company, and that the "good neighbor" slogan may find its way back into a starring role in future campaigns. State Farm just wants customers to call with some good news once in a while too.

"We're not saying we won't be there for people when things go wrong," Ward said. "It's helping them understand we're also there to help their lives go right."

Источник: https://www.chicagotribune.com/business/ct-state-farm-rebranding-0604-biz-20160603-story.html

Cotton States Mutual Insurance Company, et al., Plaintiffs-appellants, v. J.o. Anderson, Jr., et al., Defendants-appellees, 749 F.2d 663 (11th Cir. 1984)

This is an appeal from an adverse summary judgment ruling, in which the district court refused to declare O.C.G.A. Sec. 33-34-5(b) (1982) (the Georgia No-Fault Act) unconstitutional on due process, equal protection and other constitutional grounds. We affirm. Although appellant's argument is extremely persuasive, after full consideration, we conclude that we should not use the statute's "tortured history"  of interpretation in the Georgia courts as a basis for holding it unconstitutional.

As an initial matter, we must dispose of the question, raised by the appellee State of Georgia for the first time at oral argument, of whether appellant is collaterally estopped from raising these constitutional objections to the No-Fault Act. Appellee grounds this objection on the fact that appellant had raised almost identical arguments in prior litigation before the Georgia courts, and those issues were decided adversely to the appellant. See Cotton States Mutual Insurance Co. v. McFather, 251 Ga. 739, 741, 309 S.E.2d 799, 801-02 (1983) (hereinafter McFather). Although appellee's collateral estoppel argument is a formidable one, we will exercise the discretion available to us, see Parklane Hosiery Co. v. Shore, 439 U.S. 322, 331, 99 S. Ct. 645, 651, 58 L. Ed. 2d 552 (1979), and reach the merits of this case.

We recognize that appellee did not raise this issue at the trial level; nevertheless we also recognize that appellee was unable to do so because of the parallel progression of the two cases in which the constitutional objections were made. The parties at bar filed their briefs in the instant case prior to the time that the state court decision, which held adversely to appellant on the constitutional claims, was issued.  Under these circumstances, we hold that the collateral estoppel issue, though not raised in the district court, was not waived.

Collateral estoppel is properly invoked "if the issue in the subsequent proceeding is identical to the one involved in the prior action, the issue was actually litigated, and the determination of the issue was necessary in the prior action." Williams v. Bennett, 689 F.2d 1370, 1381 (11th Cir. 1982) (upholding the offensive use of collateral estoppel with regard to constitutional claims). It is clear that these three criteria are met in the case at bar. The constitutional issues raised in the McFather litigation were virtually identical to those raised in the instant case. Though the Georgia Supreme Court's treatment of those issues was admittedly cursory, they were specifically addressed and decided by that court. Furthermore, a litigant may assert collateral estoppel, though he was not a party to the prior suit. Bank of Heflin v. Landmark Inns, 604 F.2d 354 (5th Cir. 1979). Therefore, the State of Georgia is free to invoke collateral estoppel offensively against appellant.

The offensive use of collateral estoppel raises particular judicial concerns; it is governed by slightly different principles than the historic defensive use of the issue preclusion claim. See Nations v. Sun Oil Co., 705 F.2d 742, 744 (5th Cir. 1983) ("Collateral estoppel is an equitable doctrine. Offensive collateral estoppel is even a cut above that in the scale of equitable values."); Johnson v. United States, 576 F.2d 606, 614 (5th Cir. 1978), cert. denied, 451 U.S. 1018, 101 S. Ct. 3007, 69 L. Ed. 2d 389 (1981). The Supreme Court has only recently approved the offensive use of collateral estoppel. Parklane Hosiery Co. v. Shore, 439 U.S. 322, union bank credit card payment online S. Ct. 645, 58 L. Ed. 2d 522 (1979). Moreover, the Court has cautioned that fairness to both parties must be considered when it is applied. Id. at 331, 99 S. Ct. at 651. Of primary importance is whether the opposing party had an adequate incentive to litigate vigorously in the previous proceedings and whether he received a full and fair hearing in that proceeding.

Once, however, the litigant has had a full and fair opportunity to litigate his claim, the trial court has broad discretion in deciding whether offensive collateral estoppel is appropriate. See Parklane Hosiery, 439 U.S. at 331, 99 S. Ct. at 651. The Supreme Court has recently reaffirmed that collateral estoppel promotes "the comity between state and federal courts that has been recognized as a bulwark of the federal system." Allen v. McCurry, 449 U.S. 90, 95-6, 101 S. Ct. 411, 415, 66 L. Ed. 2d 308 (1980). The principles of federalism and comity are implicated in the instant case. Appellant is urging the federal courts to declare the state statute unconstitutional (by federal standards) because the state courts have experienced difficulty in their interpretations. At least in the context of civil rights suits, the Supreme Court has stated that Congress did not intend "to allow relitigation of federal issues decided after a full and fair hearing in a state court simply because the state court's decision may have been erroneous." Id. at 101, 101 S. Ct. at 418. Therefore, the confusing interpretations given this statute by the state courts should not be a basis for denying the preclusive effect of collateral estoppel.

However, the Supreme Court has also noted that preclusion may be inappropriate, particularly in constitutional adjudication, when issues of law arise in successive actions. Montana v. United States, 440 U.S. 147, 160-63, 99 S. Ct. 970, 977-78, 59 L. Ed. 2d 210 (1979). In addition, special difficulties arise when precluding a party who did not have the initiative in the prior action. See Johnson, 576 F.2d at 614. Moreover, this circuit has recently noted that the discretion used when determining if preclusion is appropriate is not unlimited. Abuse of that discretion will result if "there is a significant likelihood of substantial unfairness" to the parties if preclusion is applied. Deweese v. Town of Palm Beach, 688 F.2d 731, 734 (11th Cir. 1982). The likelihood of unfairness increases when conflicting rulings involve the same defendant.

Adopting this broad discretion as our own standard in determining the collateral estoppel question, we decide not to apply collateral estoppel in the instant case. In light of the unique history of the statute challenged here  and the important principles of federalism involved when a federal court is asked to determine the constitutionality of a state statute, we proceed to the merits of this case.

B. CONSTITUTIONAL CHALLENGES TO STATE STATUTES

Federal courts must be slow to declare state statutes unconstitutional, see Ford v. Strickland, 676 F.2d 434, 442 (11th Cir. 1982) (" [W]e do not sit to question [the state supreme court's] interpretation of that state's statutes"), and they must be especially slow to do so on the ground of the state courts' inability to consistently interpret their own statutes.  It is well-settled that " [s]tate courts have the right to construe their own statutes," Bank of Heflin v. Miles, 621 F.2d 108, 113 (5th Cir. 1980), and federal courts are bound by that state interpretation. Id. at 114. See also Sanchez v. United States, 696 F.2d 213, 216 (2d Cir. 1982) ("To comply with the principle of comity which undergirds our federal system, we are obliged to give full effect to decisions of New York's highest court on issues involving the application of New York law."). When ruling upon the constitutionality of a state statute, a federal court "may only consider the statute's plain meaning and authoritative state court constructions of the statute." Florida Businessmen v. State of Florida, 499 F. Supp. 346, 352 (N.D. Fla. 1980).

With this limited  scope of review in mind, we now turn to the statute challenged in the instant case. The No-Fault Act, prior to its amendment in 1982, provided that:

Each application for a policy of motor vehicle liability insurance sold in this state must contain separate spaces for the insured to indicate his acceptance or rejection of each of the optional coverages listed in subsection (2) of this Code section and no such policy shall be issued in this state unless these spaces are completed and signed by the prospective insured.

O.C.G.A. Sec. 33-34-5(b).

The litigation over this statute exists because of conflicting interpretations as to what burden the statute imposes on no-fault insurers to obtain specific acceptance or rejection of optional coverage from each applicant. We note initially that the No-Fault Act is facially constitutional. See Erznoznik v. City of Jacksonville, 422 U.S. 205, 216, 95 S. Ct. 2268, 2276, 45 L. Ed. 2d 125 (1974) (" [A] state statute should not be deemed facially invalid unless it is not readily subject to a narrowing construction by the state courts."). See also Sawyer v. Sandstrom, 615 F.2d 311, 315 (5th Cir. 1980). The Supreme Court has stated that " [i]n evaluating a facial challenge to a state law, a federal court must, of course, consider any limiting construction that a state court . has proffered." Hoffman Estates v. Flipside, 455 U.S. 489, 494 n. 5, 102 S. Ct. 1186, 1191 n. 5, 71 L. Ed. 2d 362 (1982). The Georgia Supreme Court has recently attempted to clarify its position as to the meaning of the statute. See Flewellan v. Atlanta Casualty Co., 250 Ga. 709, 300 S.E.2d 673 (1983).

A brief description of the history of the Georgia courts' attempts to interpret the No-Fault Act illustrates the confusion the statute has wrought.  The No-Fault Act's tortured history originated with the Georgia Court of Appeals' decision in Jones v. State Farm Mutual Auto Insurance Co., 156 Ga.App. 230, 274 S.E.2d 623 (1980), cert. dismissed, 248 Ga. 46, 280 S.E.2d 837 (1981) (hereinafter "Jones"). (Certiorari was initially granted in Jones, but then dismissed by the Georgia Supreme Court as improvidently granted.) Jones interpreted the No-Fault Act to require multiple signature lines on applications america first credit union hours indicate acceptance or rejection of optional personal injury protection (PIP) coverage. On December 1, 1982, the Georgia Court of Appeals, en banc, overruled Jones. Atlanta Casualty Co. v. Flewellen, 164 Ga.App. 885, 300 S.E.2d 166 (1982). In the Flewellen decision, the Court of Appeals stated that "to require a separate and repetitive signature by each subspace defies the rules of logic and reason and blindly applies a rule of literalness." Id. at 888, 300 S.E.2d at 169. Shortly thereafter, however, the Georgia Supreme Court, having granted certiorari sua sponte, reversed the Court of Appeals. In that decision, the court held that two signature lines, one indicating acceptance or rejection of optional PIP and another to indicate acceptance or rejection of vehicle damage coverage, would meet the statutory requirements. Flewellen v. Atlanta Casualty Co., 250 Ga. 709, 711, 300 S.E.2d 673, 676 (1983). Since the Flewellen decision, the Georgia Supreme Court has held that substantial compliance is sufficient to meet the statutory requirements. St. Paul Fire & Marine Insurance Co. v. Nixon, 252 Ga. 469, 314 S.E.2d 215 (1984). However, if the information regarding optional PIP coverage is contained in a small square in an abbreviated form, then the insurance application will not meet the substantial compliance test. Tolison v. Georgia Farm Bureau Mutual Insurance Co., 253 Ga. 97, 317 S.E.2d 185 (1984). 

Given the background of this confused judicial history,  we now turn to the constitutional objections raised by appellant. Two basic constitutional arguments are made. First, appellant contends that the statute is unconstitutionally vague, and therefore constitutes a denial of its procedural due process rights. Second, appellant contends that the penalties and punitive damages provisions of the No-Fault Act contravene its due process and equal protection rights.

Undoubtedly, appellant's strongest argument is that the statute is unconstitutionally vague. There is no question that the Georgia courts have found the No-Fault Act difficult to interpret. However, the standard of review with regard to commercial statutes is a very lenient one. Such statutes are impermissibly vague only if they provide " 'no rule or standard at all.' " Exxon Corp. v. Busbee, 644 F.2d 1030, 1033 (5th Cir.), cert. denied, 454 U.S. 932, 102 S. Ct. 430, 70 L. Ed. 2d 239 (1981) (quoting A.B. Small Co. v. American Sugar Refining Co., 267 U.S. 233, 239, 45 S. Ct. 295, 297, 69 L. Ed. 589 (1925)). "Uncertainty . is not enough for [the commercial regulatory statute] to be unconstitutionally vague; rather, it must be substantially incomprehensible." Id. at 1033. Though appellant urges us to adopt a more stringent standard of review,  we decline to do so. We hold that under the standard set forth in Exxon Corp. v. Busbee, the statute passes constitutional muster. 

As with a due process challenge to a commercial regulatory statute, an equal protection challenge is accorded minimal scrutiny. See Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 101 S. Ct. 715, 66 L. Ed. 2d 659 (1981). Only a "wholly arbitrary act" can not withstand an equal protection challenge to an economic regulatory statute. New Orleans v. Dukes, 427 U.S. 297, 303-04, 96 S. Ct. 2513, 2516-17, 49 L. Ed. 2d 511 (1976) (per curiam). See also Minnesota v. Cloverleaf, 449 U.S. at 464, 101 S. Ct. at 723 (parties asserting an irrational classification may not prevail "so long as the question is debatable"). Appellant asserts that the No-Fault Act violates the equal protection rights of no-fault insurers. However, this constitutional challenge must be evaluated under this deferential standard.

The penalty provisions built-in to the No-Fault Act clearly bear a rational relationship to the legislature's dual purpose of encouraging prompt payment and avoiding litigation over no-fault claims. In light of the fact that state legislatures are given wide latitude in the regulation of commercial interests, New Motor Vehicle Board of California v. Orrin W. Fox Co., 439 U.S. 96, 107, 99 S. Ct. 403, 410, 58 L. Ed. 2d 361 (1978), the No-Fault Act passes constitutional muster.

Accordingly, the district court's order granting summary judgment in favor of appellee is AFFIRMED.

Источник: https://law.justia.com/cases/federal/appellate-courts/F2/749/663/359435/

State Farm rebrands with less disastrous message

In a major rebranding, State Farm has unveiled a new ad campaign that shifts focus from insurance against accidents to financial planning. One ad features a boy on a bike miraculously weaving through traffic.

For 45 years, State Farm has pitched itself as the "good neighbor" who stands by you when things go wrong.

In a major rebranding, State Farm unveiled a new campaign that shifts focus from insurance against misfortune to the company's more proactive services — everything from funding college to planning for retirement.

Gone is the 5-year-old "Get to a Better State" campaign, where State Farm agents rescue customers from buffalo attacks, car accidents and other disasters.

The new tagline is: "Here to Help Life Go Right."

"We've always been there when things go wrong, but people don't realize the many ways that we've been here to help life go right," said Beth Ward, assistant vice president of marketing for Bloomington-based State Farm. "We've got banking products, life insurance products and other things that can also help enable those dreams."

Created by longtime State Farm ad agency DDB Chicago, the campaign launched Thursday with a television spot during the first game of the NBA Finals. The commercial opens with ominous scenes that play out well. Tornadoes give way to rainbows, fires spontaneously extinguish and a boy on a bike miraculously weaves through traffic. A youthful voice ponders what a State Farm agent would do in a world where nothing went wrong.

The answer? Sell you assorted financial services.

"Insurance is always going to be known as when the bleep hits the fan, they're there for you in the worst times," said John Maxham, chief creative officer of DDB. "What State Farm would like people to know is there is another side to life and another side to them, and with a little bit of planning they can help create better outcomes."

DDB Chicago, under its predecessor Needham, Harper & Steers, created the iconic "Like a Good Neighbor" slogan for State Farm in 1971, with a jingle written by pop star Barry Manilow. It has endured and remains a "part of (the company's) DNA," according to Ward. But the slogan is nowhere to be found in the new commercial, with just a faintest nod to the jingle.

The last four notes of the jingle sound at the end of the 60-second spot, corresponding with the unsung lyrics "State Farm is there."

State Farm spent $484 million on measured media in the U.S. last year, according to Kantar Media. The company plans to be "aggressive" with the new campaign, which will include online, direct mail and other advertising platforms, in addition to TV commercials.

Ward said State Farm remains an insurance company, and that the "good neighbor" slogan may find its way back into a starring role in future campaigns. State Farm just wants customers to call with some good news once in a while too.

"We're not saying we won't be there for people when things go wrong," Ward said. "It's helping them understand we're also there to help their lives go right."

Источник: https://www.chicagotribune.com/business/ct-state-farm-rebranding-0604-biz-20160603-story.html

OFAC Consolidated Frequently Asked Questions


Basic Information on OFAC and Sanctions

1. What is OFAC and what does it do?

The Office of Foreign Assets Control administers and enforces economic sanctions programs primarily against countries and groups of individuals, such as terrorists and narcotics traffickers. The sanctions can be either comprehensive or selective, using the blocking of assets and trade restrictions to accomplish foreign policy and national security goals. [09-10-02]


2. How long has OFAC been around?

The Treasury Department has a long history of dealing with sanctions. Dating back prior to the War of 1812, Secretary of the Treasury Gallatin administered sanctions imposed against Great Britain for the harassment of American sailors. During the Civil War, Congress approved a law which prohibited transactions with the Confederacy, called for the forfeiture of goods involved in such transactions, and provided a licensing regime under rules and regulations administered by Treasury.

OFAC is the successor to the Office of Foreign Funds Control (the "FFC''), which was established at the advent of World War II following the German invasion of Norway in 1940. The FFC program was administered by the Secretary of the Treasury throughout the war. The FFC's initial purpose was to prevent Nazi use of the occupied countries' holdings of foreign exchange and securities and to prevent forced repatriation of funds belonging to nationals of those countries. These controls were later extended to protect assets of other invaded countries. After the United States formally entered World War II, the FFC played a leading role in economic warfare against the Axis powers by blocking enemy assets and prohibiting foreign trade and financial transactions.

OFAC itself was formally created in December 1950, following the entry of China into the Korean War, when President Truman declared a national emergency and blocked all Chinese and North Korean assets subject to U.S. jurisdiction. [05-02-06]


3. What does one mean by the term "prohibited transactions"?

Prohibited transactions are trade or financial transactions and other dealings in which U.S. persons may not engage unless authorized by OFAC or expressly exempted by statute. Because each program is based on different foreign policy and national security goals, prohibitions may vary between programs. [06-16-06]


4. Are there exceptions to the prohibitions?

Yes. OFAC regulations often provide general licenses authorizing the performance of certain categories of transactions. OFAC also issues specific licenses on a case-by-case basis under certain limited situations and conditions. Guidance on how to request a specific license is found below and at 31 C.F.R. 501.801.

To apply for a specific license, please go to our License Application Page. [06-16-06]


6. Where can I find the specific details about the embargoes?

A summary description of edmond canada weather particular embargo or sanctions program may be found in the Sanctions Programs and Country Information area and in the Guidance and Information for Industry Groups area on OFAC's website. The text of Legal documents may be found in the Legal Documents area of OFAC's website which contains the text of 31 C.F.R. Chapter V and appropriate amendments to that Chapter which have appeared in the Federal Register. [05-21-18]


7. Can I get permission from OFAC to transact or trade with an embargoed country?

OFAC usually has the authority by means of a specific license to permit a person or entity to engage in a transaction which otherwise would be prohibited. In some cases, however, legislation may restrict that authority.

To apply for a specific license, please go to our License Application Page. [09-10-02]


8. What must I do to get permission to trade with an embargoed country?

In some situations, authority to engage in certain transactions is provided by means of a general license. In instances where a general license does not exist, a written request for a specific license must be filed with OFAC. The request must conform to the procedures set out in the regulations pertaining to the particular sanctions program. Generally, application guidelines and requirements must be strictly followed, and all necessary information must be included in the application in order for OFAC to consider an application. For an explanation about the difference between a general and a specific license as well as answers to other licensing questions, see the licensing questions section.

To apply for a specific license, please go to our License Application Page. [09-10-02]


9. What do you mean by "blocking?"

Another word for it is "freezing." It is simply a way of controlling targeted property. Title to the blocked property remains with the target, but the exercise of powers and privileges normally associated with ownership is prohibited without authorization from OFAC. Blocking immediately imposes an across-the-board prohibition against transfers or dealings of any kind with regard to the property. [09-10-02]


10. What countries do I need to worry about in terms of U.S. sanctions?

OFAC administers a number of U.S. economic sanctions and embargoes that target geographic regions and governments. Some programs are comprehensive in nature and block the government and include broad-based trade restrictions, while others target specific individuals and entities. (Please see the Sanctions Programs and Country Information page for information on specific programs.) It is important to note that in non-comprehensive programs, there may be broad prohibitions on dealings with countries, and also against specific named individuals and entities. The names are incorporated into OFAC s list of Specially Designated Nationals and Blocked Persons ("SDN list") which includes approximately 6,400 names of companies and individuals who are connected with the sanctions targets. In addition, OFAC maintains other sanctions lists that may have different prohibitions associated with them. A number of the named individuals and entities are known to move from country to country and may end up in locations where they would be least expected. U.S. persons are prohibited from dealing with SDNs wherever they are located and all SDN assets are blocked. Entities that a person on the SDN List owns (defined as a direct or indirect ownership interest of 50% or more) are also blocked, regardless of whether that entity is separately named on the SDN List. Because OFAC's programs are dynamic, it is very important to check OFAC's website on a regular basis to ensure that your sanctions lists are current and you have complete information regarding the latest restrictions affecting countries and parties with which you plan to do business. [05-21-18]


11. Who must comply with OFAC regulations?

U.S. persons must comply with OFAC regulations, including all U.S. citizens and permanent resident aliens regardless of where they are located, all persons and entities within the United States, all U.S. incorporated entities and their foreign branches. In the cases of certain programs, foreign subsidiaries owned or controlled state farm bank compliance test answers U.S. companies also must comply. Certain programs also require foreign persons in possession of U.S.-origin goods to comply. [01-15-15]


12. How much are the fines for violating these regulations?

The fines for violations can be substantial. In many cases, civil and criminal penalties can exceed several million dollars.  Civil penalties vary by sanctions program, and the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalty Inflation Adjustment Act Improvements Act of 2015, requires OFAC to adjust civil monetary penalty amounts annually.  For current penalty amounts, see section V.B.2.a of Appendix A to OFAC;s Economic Sanctions Enforcement Guidelines at 31 C.F.R Part 501.  [03-08-17]


13. How can I report a possible violation of OFAC regulations by my company to OFAC?  Will I receive "amnesty" if I report a possible violation to OFAC or if my failure to comply with OFAC regulations was inadvertent?

OFAC encourages anyone who may have violated OFAC-administered regulations to disclose the apparent violation to OFAC voluntarily.  Voluntary self-disclosure to OFAC is considered a mitigating factor by OFAC in enforcement actions, and pursuant to OFAC’s Enforcement Guidelines, will result in a reduction in the base amount of any proposed civil penalty.  

Please submit all voluntary self-disclosures electronically to [email protected]  Unless the disclosure is an initial disclosure which will be supplemented with additional information, the submission should contain sufficient detail to afford OFAC a complete understanding of an apparent violation’s circumstances.  Please review the Office of Compliance and Enforcement (“OCE”) Data Delivery Standards Guidance: Preferred Practices for Productions to OFAC, which details OFAC’s preferred technical standards for formatting electronic document productions submitted to OCE.

OFAC does not have an "amnesty" program.  OFAC does, however, review the totality of the circumstances surrounding any apparent violation, including whether a matter was voluntarily self-disclosed to OFAC.  OFAC will also consider the existence, nature, and adequacy of a subject person’s risk-based OFAC compliance program at the time of the apparent violation, where relevant, among other factors.  Please see OFAC’s Enforcement Guidelines for additional information regarding voluntary self-disclosures and other mitigating factors, as well as the agency’s general framework for the enforcement of economic sanctions programs administered by OFAC. [12-04-20]


14. Can I regard previously issued and published opinion letters, regulatory interpretations, or other statements as guidance for my transactions?

Great care should be taken when placing reliance on such materials to ensure that the transactions in question fully conform to the letter and spirit of the published materials and that the materials have not been superseded. [09-10-02]


15. Can OFAC change its previously stated, non-published interpretation or opinion without first giving public notice?

Yes. OFAC, therefore, strongly encourages parties to exercise due diligence when their business activities may touch on an OFAC-administered program and to contact OFAC if they have any questions about their transactions. [09-10-02]


91. I am looking for the terrorist list on your web site so my company can comply with U.S. law.  Where can I find this list?

OFAC state farm bank compliance test answers regulations are broader than the specific laws dealing with terrorists and persons who support them.  All individuals and entities that fall under U.S. jurisdiction should use OFAC s List of Specially Designated Nationals and Blocked Persons (SDN List).  This list includes specially designated global terrorists and narcotics traffickers, among other designated persons, and is available on OFAC s website.  In addition, OFAC maintains other sanctions lists that may have different prohibitions associated with each that apply to U.S. persons or transactions otherwise subject to U.S. jurisdiction.  It is important to note that some OFAC sanctions block categories of persons even if those persons do not appear on the SDN List.  For example, this is the case for any person that meets the definition of the Government of Venezuela in Executive Order 13884 of August 5, 2019 ( Blocking Property of the Government of Venezuela ).  It is also important to note that OFAC s Cuba sanctions prohibit most transactions with Cuban nationals, wherever located.  U.S. persons are expected to exercise due diligence in determining whether any such persons are involved in a proposed transaction. [08-11-2020]


126. I tried to ship a package and it was returned to me because of OFAC sanctions.  Why?

There may have been one or more reasons the package was rejected.  For example, was it destined for Cuba and lacking a description of the contents?  Was it an unlicensed commercial shipment destined for North Korea?  Was it a personal gift destined for an individual in Iran with a stated value exceeding $100?  These examples are legitimate reasons for shipping companies to refuse to process such packages, such as packages that do not conform with shipping company guidelines and rules, as well as OFAC and other U.S. government regulations.  Not only could you be liable for attempting to send such packages, but the shipping companies also could be liable for their role in processing these.  See OFAC s country program webpages for more information on the restrictions on shipments to high-risk jurisdictions, for example the Crimea region of Ukraine, Cuba, Iran, North Korea, or Syria. [08-11-2020]


127. I tried to ship a package and it was "blocked" by the shipping company "due to OFAC sanctions." Why? And how can I get the package ecb violation amnesty companies are required to "block" packages in which a Specially Designated National ("SDN") or other blocked person has an interest. When a package is required to be "blocked," the shipper must retain the package rather than reject and return it to the sender. Blocking is not required if a general or specific license from OFAC authorizes the shipper to reject or process the package, or if the transaction is otherwise exempted from the prohibitions based on the type or content of the package. To request a license for the package s release, apply online or send a letter with a detailed description of the package s contents and an explanation of the parties involved in the transaction, along with a copy of the package s air waybill or Customs Declaration and Dispatch form, to:

U.S. Department of the Treasury
Office of Foreign Assets Control
Licensing Division
1500 Pennsylvania Avenue, NW
Washington, DC 20220

[02-07-2011]


468. How do I verify an OFAC document? For example, how do I know that an OFAC license or a Specially Designated Nationals (SDN) List removal letter is authentic?

If you have questions about the authenticity of an OFAC document that is not publically posted on the OFAC website, you can contact OFAC and reference the specific case ID or FAC number that is included on the document.

  • To verify a specific license, please contact the OFAC Licensing Division at 1-202-622-2480.
  • To verify an SDN removal letter, please email [email protected]
  • To verify another OFAC document, please contact the OFAC Compliance Division at 1-202-622-2490.
[04-21-2016]

469. Does OFAC issue certificates of non-inclusion to help prove that a name is not on one of OFAC's sanctions lists?

No, OFAC does not issue non-inclusion certificates. [04-21-2016]


906. What do Iran General License (GL) N, Syria GL 21, and Venezuela GL 39 authorize with respect to the fight against the Coronavirus Disease 2019 (COVID-19)?  How do these GLs differ from OFAC’s existing humanitarian exemptions, exceptions, and authorizations?

In order to further aid the global fight against COVID-19, OFAC has issued time-limited general licenses, Iran GL N, Syria GL 21, and Venezuela GL 39 (together, the COVID-19-related GLs), to provide broad authorizations for certain COVID-19-related transactions and activities.  The new general licenses expand upon longstanding humanitarian exemptions, exceptions, and authorizations in OFAC sanctions programs, which remain in effect (see OFAC’s April 16, 2020 Fact Sheet on the Provision of Humanitarian Assistance and Trade to Combat COVID-19) to cover additional COVID 19-related transactions and activities.  For example, Iran GL N expands authorizations under the Iran sanctions program to cover certain items that previously would have required a specific license for exportation or reexportation to Iran, such as certain COVID-19 testing or vaccine manufacturing equipment.  Both U.S. persons and non-U.S. persons whose activities are within U.S. jurisdiction — including exporters, nongovernmental organizations, international organizations, and financial institutions — may rely upon the authorizations in these COVID-19-related GLs provided they meet the applicable conditions.  All three GLs expire on June 17, 2022.

The COVID-19-related GLs provide authorization that is independent of OFAC’s other humanitarian-related authorizations.  Accordingly, conditions and limitations included in other humanitarian-related authorizations do not apply to transactions and activities conducted pursuant to the COVID-19-related GLs, unless explicitly incorporated therein.  For example, for sales to Iran of agricultural commodities, food, medicine, and medical devices pursuant to the general license in 31 C.F.R. § 560.530, payment terms and financing must be limited to and consistent with those authorized by 31 C.F.R. § 560.532.  However, because Iran GL N does not incorporate similar limitations on payment terms, COVID-19-related exports and reexports to Iran authorized by Iran GL N are not subject to the payment terms in 31 C.F.R. § 560.532.

Prior to the expiration of the COVID-19-related GLs, OFAC may issue additional guidance, as appropriate.  OFAC’s longstanding humanitarian exemptions, exceptions and authorizations in each of these sanctions programs will not be impacted by the expiration of these GLs.  For transactions not otherwise authorized or exempt, OFAC considers license requests on a case-by-case basis and prioritizes applications, compliance questions, and other requests related to humanitarian support for people in areas subject to comprehensive sanctions. [06-16-2021]


907. For the purposes of Iran General License (GL) N, what are goods or technology for use in connection with the prevention, diagnosis, or treatment of the Coronavirus Disease 2019 (COVID-19)?  What transactions and activities related to the export or reexport of these items are authorized?

For the purposes of Iran GL N, covered COVID-19-related goods or technology include, for example:  medical gowns; medical eye shields and goggles; surgical gloves; face shields; respirators and masks such as N95, N99, and N100 masks; personal hygiene products such as soap and hand sanitizer and other water, sanitation, and hygiene supplies such as: water purification supplies and hygiene promotion materials; vaccines and vaccine ingredients or components required for the production of vaccines; equipment, supplies, and containers for transporting, storing, and administering vaccines; COVID-19 testing kits and equipment, and software and technology for processing such kits; equipment, software, and technology for diagnostic imaging tests; ventilators or components thereof; oxygen tanks and supplies to deliver oxygen; supplies, medicines, or other therapies to treat COVID-19; and field hospitals or mobile medical units, provided that all conditions and limitations of Iran GL N are satisfied, including with regard to the classification of certain goods and technology set forth in paragraph (d)(1) of Iran GL N.  Certain COVID-19-related medical devices designated as EAR99 that would otherwise require a specific license for exportation or reexportation to Iran because they are included on OFAC’s List of Medical Devices Requiring Specific Authorization — such as High Efficiency Particulate Air (HEPA) Filtration Systems and HEPA filters — would not require a specific license for exportation or reexportation to Iran, provided that all conditions and limitations of Iran GL N are satisfied.

Transactions and activities related to the exportation, reexportation, sale, or supply of such goods or technology include, for example:  processing and transfer of funds; payment of taxes, fees, and import duties; purchase or receipt of permits, licenses, or public utility services; making of shipping and cargo inspection arrangements; obtaining of insurance; arrangement of financing and payment; shipping and storage state farm bank compliance test answers the goods; receipt of payment; and entry into contracts (including executory contracts), provided that all conditions and limitations of Iran GL N are satisfied.  Certain transactions and activities involving the Central Bank of Iran (CBI), the National Iranian Oil Company (NIOC), or any entity in which NIOC owns, directly or indirectly, a 50 percent or greater interest, are also authorized under Iran GL N.

As noted in Iran GL N, this general license does not authorize the unblocking of any property blocked pursuant to any part of 31 CFR chapter V, including property of the Government of Iran. [06-16-2021]


908. For the purposes of Iran General License (GL) N and Syria GL 21, what are services related to the prevention, diagnosis, or treatment of the Coronavirus Disease 2019 (COVID-19)?  What transactions and activities related to the export or, in the case of Iran GL N, import of these services are authorized?

For the purposes of Iran GL N and Syria GL 21Iran GL N or Syria GL 21 are satisfied.

Transactions and activities related to the exportation or reexportation of such services include, for example:  processing and transfer of funds; payment of taxes, fees, and import duties; purchase or receipt of permits, licenses, or public utility services; making of shipping or cargo inspection arrangements; obtaining of insurance; arrangement of financing and payment; delivery of services; receipt of payment; and entry into contracts (including executory contracts), provided all conditions of Iran GL N or Syria GL 21 are satisfied.

As noted in Iran GL N and Syria GL 21, these general licenses do not authorize the unblocking of any property blocked pursuant to any part of 31 CFR chapter V, including property of the Government of Iran or property of the Government of Syria. [06-16-2021]


909. For the purposes of Venezuela General License (GL) 39, what are transactions and activities related to the prevention, diagnosis, or treatment of the Coronavirus Disease 2019 (COVID-19)?

For the purposes of Venezuela GL 39, transactions and activities related to the prevention, diagnosis, or treatment of COVID-19 in Venezuela include, for example:  the export or import of goods and services, and transactions and activities related thereto, in each case that would otherwise be prohibited due to the involvement of the Government of Venezuela, certain blocked financial institutions as described in Venezuela GL 39, or both, provided all conditions and limitations in the GL are satisfied.

COVID-19-related goods or technology include, for example:  medical gowns; medical eye shields and goggles; surgical gloves; face shields; respirators and masks such as N95, N99, and N100 masks; personal hygiene products such as soap and hand sanitizer and other water, sanitation, and hygiene supplies; vaccines and vaccine ingredients or components required for the production of vaccines; equipment, supplies, and containers for transporting, storing, and administering vaccines; personal protective equipment; COVID-19 testing kits and equipment, software and technology for processing such kits; equipment, software, and technology for diagnostic imaging tests; ventilators or components thereof; oxygen tanks and supplies to deliver oxygen; supplies, medicines, or other therapies to treat COVID-19; and field hospitals or mobile medicals units, provided that all conditions and limitations of Venezuela GL 39 are satisfied.

Venezuela GL 39 are satisfied.

Other transactions and activities related to the prevention, diagnosis, or treatment of COVID-19 in Venezuela include, for example, when in connection with COVID-19-related goods, technology, or services:  processing and transfer of funds, payment of taxes, fees, and import duties; purchase or receipt of permits, licenses, or public utility services; making of shipping or cargo inspection arrangements; obtaining of insurance; arrangement of financing and payment; shipping of goods; delivery of services; receipt of payment; and entry into contracts (including executory contracts), provided all conditions and limitations in Venezuela GL 39 are satisfied.

As noted in Venezuela GL 39, this general license does not authorize the unblocking of any property blocked pursuant to any part of 31 CFR chapter V, including property of the Government of Venezuela or certain specified blocked financial institutions listed in Venezuela GL 39. [06-16-2021]


910. What are the due diligence expectations of U.S. financial institutions associated with processing fund transfers or trade finance transactions that are authorized by Iran General License (GL) N, Syria GL 21, and Venezuela GL 39?

U.S. financial institutions are authorized to process transfers of funds or engage in trade finance transactions ordinarily incident and necessary to give effect to the transactions and activities authorized by Iran GL N, Syria GL 21, and Venezuela GL 39.

Such financial institutions may rely on the originator of the funds transfer with regard to compliance with Iran GL N, Syria GL 21, and Venezuela GL 39, provided that the financial institution does not know or have reason to know that the funds transfer is not in compliance with such GLs. [06-16-2021]


911. Do non-U.S. persons risk exposure to U.S. sanctions for engaging in certain activities to respond to the Coronavirus Disease 2019 (COVID-19) pandemic that U.S. persons would be authorized to engage in under Iran General License (GL) N, Syria GL 21, or Venezuela GL 39?

No.  Non-U.S. persons do not risk exposure under U.S. sanctions for engaging in certain activities to respond to the COVID-19 pandemic that would be authorized under Iran GL N, Syria GL 21, or Venezuela GL 39, as appropriate, if engaged in by a U.S. person.  This includes non-U.S. exporters, nongovernmental organizations, international organizations, and foreign financial institutions, as well as other non-U.S. persons engaging in certain activities to respond to the COVID-19 pandemic.

For additional information on humanitarian activities by non-U.S. persons in relation to sanctioned jurisdictions, please see FAQs 844, 884, and 885.  For information specific to the provision of humanitarian assistance to the Venezuelan people, please see OFAC’s August 6, 2019 Fact Sheet: Guidance Related to the Provision of Humanitarian Assistance and Support to the Venezuelan People.  For more information on other relevant exemptions, exceptions, and authorizations for humanitarian assistance and trade to combat COVID-19 under OFAC’s sanctions program, please see OFAC’s April 16, 2020 Fact Sheet: Provision of Humanitarian Assistance and Trade to Combat COVID-19.  [06-16-2021]


OFAC Licenses


General Questions Regarding OFAC Licenses and Licensing Procedures

74. What is a license?

A license is an authorization from OFAC to engage in a transaction that otherwise would be prohibited. There are two types of licenses: general licenses and specific licenses.

A general license authorizes a particular type of transaction for a class of persons without the need to apply for a license.

A specific license is a written document issued by OFAC to a particular person or entity, authorizing a particular transaction in response to a written license application.

Persons engaging in transactions pursuant to general or specific licenses must make sure that all conditions of the licenses are strictly observed.

OFAC's regulations may contain statements of OFAC's specific licensing policy with respect to particular types of transactions. [06-16-06]


75. Do I have to fill out a particular form to get a license to engage in a transaction?

Most license applications do not have to be submitted on a particular form. However, it is essential to include in the request all necessary information as required in the application guidelines or the regulations pertaining to the particular embargo program. When applying for a license, provide a detailed description of the proposed transaction, including the names and addresses of any individuals/companies involved. The mailing address for license applications is:

Office of Foreign Assets Control
U.S. Department of the Treasury
Treasury Annex
1500 Pennsylvania Avenue, NW
Washington, DC 20220
Attn: Licensing Division

In order to apply for a specific license to release blocked funds, you are encouraged to file an electronic application to have blocked funds released by visiting the following link: https://licensing.ofac.treas.gov/Apply/Introduction.aspx

You may also submit an application for the release of blocked funds which is available on OFAC's website under "Forms." You should print this form, complete the required information, attach payment instructions, and mail it to the address listed above.

Depending upon the transaction, there may be specific guidance available on OFAC's website under relevant "Guidance on Licensing policy" on OFAC's various sanctions program web pages. [10-08-13]


76. Can I appeal a denial of my license application?

A denial by OFAC of a license application constitutes final agency action. The regulations do not provide for a formal process of appeal. However, OFAC will reconsider its determinations for good cause, for example, where the applicant can demonstrate changed circumstances or submit additional relevant information not previously made available to OFAC. [09-10-02]


77. How can I find out the status of my pending license application?

OFAC will notify applicants in writing as soon as a determination has been made on their application. The length of time for determinations to be reached will vary depending on the complexity of the transactions under consideration, the scope and detail of interagency coordination, and the volume of similar applications awaiting consideration. Applicants are encouraged to wait at least two weeks before telephonically contacting the Licensing Division at night at the museum 3 tamil dubbed 622-2480 to inquire about the status of their application. Callers can use OFAC's automated license application status hotline (accessible through the 202-622-2480 number) to check on the status of their application. [10-08-13]


78. What agencies other than Treasury review OFAC license applications and what are the roles of these other agencies?

Many of OFAC's licensing determinations are guided by U.S. foreign policy and national security concerns. Numerous issues often must be coordinated with the U.S. Department of State and other government agencies, such as the U.S. Department of Commerce. Please note that the need to comply with other provisions of 31 C.F.R. chapter V, and with other applicable provisions of law, including any aviation, financial, or trade requirements of agencies other than the Department of Treasury's Office of Foreign Assets Control. Such requirements include the Export Administration Regulations, 15 C.F.R. Parts 730 et seq., administered by the Department of Commerce, and the International Traffic in Arms Regulations, 22 C.F.R. Parts 120-130, administered by the Department of State. [06-16-06]


51. How do I apply for a license to get my money unblocked?

With respect to blocked funds transfers, you are encouraged to file an electronic application to have blocked funds released by visiting the following link: https://licensing.ofac.treas.gov/Apply/Introduction.aspx

You may also submit an application for the release of blocked funds which is available on OFAC's website under "Forms." You should print this form, complete the required information, attach payment instructions, and mail it to:

Office of Foreign Assets Control
U.S. Department of the Treasury
Treasury Annex
1500 Pennsylvania Avenue, NW
Washington, DC 20220
Attn: Licensing Division

It is extremely important that the underlying transaction be described in detail and copies of supporting documentation be included in the package. [10-08-13]


58. What are the chances that my application will be approved?

Each application is reviewed on a case-by-case basis and often requires interagency consultation. Although we cannot predict how long this review might take, following existing application guidelines will help to expedite your determination. [09-10-02]


59. Do I need a registration number or license to donate goods?

Most OFAC sanctions programs provide exemptions to their prohibitions for certain donated goods, such as articles to relieve human suffering. This is not the case for all programs, however. You should refer to the legal section of OFAC's website for the regulations applicable to the specific target or target country of your donation. [09-10-02]


Questions Regarding Licenses Authorizing Exports of Agricultural Commodities, Medicine, and Medical Devices to Iran Pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA)

97. What format options are permitted for submitting license applications pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA)?

OFAC permits two format options for submitting TSRA license applications: online or hard-copy, though we highly recommend the use of OFAC’s online application portal.  Applications submitted via mail must be accompanied by a cover letter that includes some essential information:  the purpose of the application and the applicant’s full contact information.  If either the cover letter or the pertinent information is missing, the application is considered incomplete and risks delay or rejection. [04-12-2021]


98. How should I present my TSRA license application?

Applicants should clearly enumerate in a table format all pertinent information related to their proposed transactions, including: a) Full names and addresses of all parties involved in the transactions and their roles, including financial institutions and any Iranian broker (identify company principals), purchasing agent (identify company principals), end-user(s) (full contact name), or other participants involved in the purchase of the proposed export items; and b) If applicable, the commodity classification numbers that are associated with the proposed export items. [04-12-2021]


100. If I am submitting multiple TSRA license applications at the same time, should I send them under a single cover letter?

OFAC requires applicants to submit each individual application separately; regardless of if you are completing the online application or sending in a hard copy application through the mail. If an applicant is submitting a hard copy, each application should be in a separate envelope, accompanied by a separate cover letter. Applicants should not submit multiple applications in a single envelope with a single cover letter. If you submit applications in that manner, you may encounter some delay in the processing of your applications. Therefore, in order to prevent such delay, submit one application with one cover letter per envelope. [03-16-2015]


101. Should I send a sample of the proposed export product as an attachment to my TSRA license application?

No. OFAC does not require samples of proposed export products to be sent as attachments to any application. OFAC does not need to examine samples of the actual product in making its final determination. Therefore, please do not include any samples with your application. [06-14-2007]


Specific to Iran

117. I hold a specific license to sell agricultural goods, medicine, or medical devices to Iran. The general license at section 560.532(a)(4) of the Iranian Transactions and Sanctions Regulations (ITSR) authorizes me to accept a letter of credit issued by an Iranian financial institution whose property and interests in property are blocked solely pursuant to the ITSR (i.e., an Iranian financial institution that is not listed on OFAC s List of Specially Designated Nationals and Blocked Persons (SDN List)). The general license, however, also states that a U.S. financial institution may not advise, confirm, or otherwise deal in that credit. How am I supposed to know if/when a letter of credit has been issued for my sale and how do I get paid? My bank accounts are all at U.S. financial institutions.

This language is in the general license at section 560.532(a)(4) of the ITSR because it is contrary to U.S. foreign policy to allow U.S. financial institutions to maintain active correspondent relationships with Iranian banks. The language, however, does not preclude a U.S. financial institution or an entity owned or controlled by a United States Person and established or maintained outside the United States ( U.S.-owned or -controlled foreign entity ) from being a second advising bank (i.e. receiving and passing forward advice from a third-country bank that the credit has been issued), nor does it preclude the U.S. financial institution or a U.S.-owned or -controlled foreign entity from receiving funds in payment for the licensed export from a third-country bank. You should also note that the Iranian Transactions and Sanctions Regulations authorize U.S. financial institutions and U.S.-owned or -controlled foreign entities to directly advise or confirm letters of credit issued by third-country banks for authorized shipments. The third-country bank may not be an overseas branch of a U.S. financial institution, a U.S.-owned or -controlled foreign entity, an Iranian financial institution, or the Government of Iran, unless otherwise authorized by OFAC. In none of these circumstances, however, may there be any direct or indirect involvement of entities the property and interests in property of which have been blocked under any of the programs administered by OFAC, except for persons whose property and interests in property are blocked solely pursuant to Executive Order 13599 and the Iranian Transactions and Sanctions Regulations. [01-13-2017]


Specific to Sudan

500. I am an exporter of agricultural commodities, medicine, or medical devices to Sudan and have previously obtained specific licenses from OFAC for such exports.  Do I still need to apply for a specific license from OFAC for exports or reexports of such items to Sudan?

No.  As of December 14, 2020, no license from OFAC is required to export or reexport agricultural commodities, medicines, or medical devices to Sudan. [04-12-2021]


How to Receive Notifications About OFAC Updates

86. Does OFAC have an email service that will notify me when there are updates to any of its sanctions lists?

Yes. OFAC has multiple e-mail subscription services available. Please visit the following link to sign up for these services:

https://service.govdelivery.com/service/multi_subscribe.html?code=USTREAS

OFAC also maintains a Really Simple Syndication (RSS) feed. This feed is updated whenever the OFAC site is updated. [11-18-10]


92. I'm a subscriber to OFAC's e-mail notification services. For some reason I have stopped receiving the broadcast messages when OFAC updates its website. Why is this?

Check to see if the messages are in your SPAM folder. Mostly likely, it is your SPAM filter or your network configuration that is preventing you from receiving the OFAC broadcast messages. If you believe that may be the case, please discuss the matter with your IT department or network administrator. You may need to have your IT personnel allow e-mails from the following domain to come through the SPAM filter, "subscriptions.treas.gov;" in some cases allowing the domain, treas.gov through the filter will also work. If you believe that you have been removed from the subscription list in error you may contact OFAC at [email protected] or re subscribe here. [04-21-15]


93. I recently attempted to subscribe to one of OFAC s e-mail list services and I have not yet received my confirmation e-mail. Why is this?

Failure to receive a confirmation e-mail is typically (though not always) the result of a configuration problem on the user s end. The user should follow these steps to ensure that he or she is using the system properly.

  1. Be patient. For a variety of reasons e-mail sometimes take a little longer than expected to reach a user. If you do not receive a confirmation e-mail within a day of subscribing, proceed to step 2.
  2. Confirm that you have entered the correct e-mail address and address punctuation. A surprising number of errors have been the result of users accidentally using commas instead of periods.
  3. Check to see if you have a SPAM filter in place. SPAM filters have a variety of configurations. Some of these filters have been known to erroneously block e-mails originating from OFAC s list servers. OFAC cannot provide technical support for local configuration issues. If you believe a SPAM filter is preventing you from receiving OFAC e-mails, please discuss the matter with your IT department or network administrator. You will need to have your IT personnel allow e-mails from the following domain to come through the State farm bank compliance test answers filter "subscriptions.treas.gov". Once this is done you may proceed to step 4. If you can confirm that you do not have a SPAM filter in place or any other local configuration problem, please skip step 4 and proceed to step 5.
  4. If your network or e-mail client s configuration is preventing you from receiving your subscription confirmation e-mail, it is likely that you will not be able to receive e-mail from OFAC s list servers even if OFAC manually adds you to our listserv. These configuration issues must be resolved with your IT department or network administrator before you can proceed.
  5. If, after you have exhausted all of the above options, you still fail to receive OFAC s broadcast notifications, please call our support hotline at 1-800-540-6322. [12-19-07]

OFAC Information on a Credit Report

70. What Is This OFAC Information On My Credit Report?

Credit bureaus and agencies in particular have adopted new measures to ensure compliance with OFAC regulations. Before issuing a credit report, they use screening software to determine if a credit applicant is on OFAC's Specially Designated Nationals (SDN) list or one of OFAC's other sanctions lists. This software matches the credit applicant's name and other information to the names on OFAC's sanctions lists. If there is a potential match, the credit bureaus may place a "red flag" or alert on the report. This does not necessarily mean that someone is illegally using your social security number or that you have bad credit. It is merely a reminder to the person checking your credit that he or she should verify whether you are the individual on one of OFAC's sanctions lists by comparing your information to the OFAC information. If you are not the individual on the sanctions list, the person checking your credit should disregard the OFAC alert, and there is no need to contact OFAC. However, if the person checking your credit believes you are the person on one of OFAC's sanctions lists, then he or she should call the OFAC Hotline to verify and report it. [01-30-15]


71. How Can I Get The OFAC Alert Off My Credit Report?

A consumer has the right under the Fair Credit Reporting Act (FCRA), 15 U.S.C. 1681 et seq., to request the removal of incorrect information on his/her credit report. To accomplish this, consumers should contact the credit reporting agency or bureau that issued the credit report. For more information on consumers' rights under the FCRA, visit the Federal Trade Commission's website at http://www.ftc.gov/os/statutes/fcrajump.shtm or the Consumer Financial Protection Bureau at 855-411-2372. [01-30-2015]


Entities Owned by Persons Whose Property and Interest in Property are Blocked (50% Rule)

These Frequently Asked Questions (FAQs) respond to inquiries received by the Department of the Treasury s Office of Foreign Assets Control (OFAC) relating to the status of entities owned by individuals or entities whose property and interests in property are blocked under Executive orders and regulations administered by OFAC (blocked persons). These FAQs provide additional clarity regarding revised guidance that OFAC issued on August 13, 2014, which can be found on OFAC s website here, amending earlier guidance that had been issued on February 14, 2008 (OFAC s 50 Percent Rule). The revised guidance states that the property and interests in property of entities directly or indirectly owned 50 percent or more in the aggregate by one or more blocked persons are considered blocked regardless of whether such entities appear on OFAC s Specially Designated Nationals and Blocked Persons List (SDN List) or the annex to an Executive order. The revised guidance expands upon the earlier guidance by addressing entities owned 50 percent or more in the aggregate by more than one blocked person.*

For the purposes of clarification, see specific FAQs below. If you require additional guidance with respect to the application of OFAC s 50 Percent Rule, you may contact OFAC and submit information pertaining to the specific facts and circumstances. [10-31-2017]

*OFAC also applies a 50 percent rule to entities on the Sectoral Sanctions Identifications List (SSI List) created in July 2014 in the Ukraine-/Russia-related sanctions context. The property and interests in property of persons on the SSI List (and entities owned 50 percent or more in the aggregate by one or more persons subject to the SSI List restrictions) are not required to be blocked; instead a more limited set of transaction restrictions applies to them. In the context of the SSI List restrictions, therefore, these FAQs can be used to identify which subordinate entities are subject to the SSI List restrictions what county is bangor michigan in and are not meant to suggest that any additional actions (such as blocking) apply to those entities.  The references to 33 percent or greater ownership and ownership of a majority of the voting interests in Directive 4, as amended on October 31, 2017, do not change the applicability of OFAC s 50 percent rule in the Directive 4 context.  For additional information, see FAQs 373, 537, and 538. 


398. Does OFAC consider entities over which one or more blocked persons exercise control, but of which they do not own 50 percent or more in the aggregate, to be blocked pursuant to OFAC s 50 Percent Rule?

No.  OFAC s 50 Percent Rule speaks only to ownership and not to control.  An entity that is controlled (but not owned 50 percent or more) by one or more blocked persons is not considered automatically blocked pursuant to OFAC s 50 Percent Rule.  OFAC may, however, designate the entity under an available sanctions criteria or otherwise identify the entity as blocked property if determined to be controlled by one or more designated persons and add the entity to OFAC s List of Specially Designated Nationals and Blocked Persons (SDN List). 

OFAC urges caution when considering a transaction with an entity that is not a blocked person (a non-blocked entity) in which one or more blocked persons have a significant ownership interest that is less than 50 percent or which one or more blocked persons may control by means other than a majority ownership interest.  Such non-blocked entities may become the subject of future designations or enforcement actions by OFAC.  In addition, persons should be cautious in dealing with such a non-blocked entity to ensure that they are not, for example, dealing with a blocked person representing the non-blocked entity, such as entering into a contract that is signed by a blocked person.  Please also note that some sanctions programs (e.g., the Crimea region of Ukraine, Cuba, Iran, North Korea, Syria, and Venezuela) block certain persons without an OFAC designation; these blockings are based on criteria separate from OFAC s 50 Percent Rule, such as the blocking of persons that meet the definition of a blocked government. [08-11-2020]


399. Does OFAC aggregate ownership stakes of all blocked persons when determining whether an entity is blocked pursuant to OFAC s 50 Percent Rule?

Yes. On August 13, 2014, OFAC indicated in its revised 50 Percent Rule guidance that OFAC's 50 Percent Rule applies to entities owned 50 percent or more in the aggregate by one or more blocked persons. Accordingly, if Blocked Person X owns 25 percent of Entity A, and Blocked Person Y owns another 25 percent of Entity A, Entity A is considered to be blocked. This is so because Entity A is owned 50 percent or more in the aggregate by one or more blocked persons. For the purpose of calculating aggregate ownership, the ownership interests of persons blocked under different OFAC sanctions programs are aggregated. [08-13-2014]


400. As explained in FAQ 398, OFAC s 50 Percent Rule does not apply if one or more individuals who are blocked persons (blocked individuals) control, but do not own 50 percent or more of, an entity. Can persons engage in negotiations, enter into contracts, or process transactions involving a blocked individual when that blocked individual is acting on behalf of the non-blocked entity that he or she controls (e.g., a blocked individual is an executive of a non-blocked entity and is signing a contract on behalf of the non-blocked entity)?

No. OFAC sanctions generally prohibit transactions involving, directly or indirectly, a blocked person, absent authorization from OFAC, even if the blocked person is acting on behalf of a non-blocked entity. Therefore, U.S. persons should be careful when conducting business with non-blocked entities in which blocked individuals are involved; U.S. persons may not, for example, enter into contracts that are signed by a blocked individual. [08-13-2014]


401. OFAC s 50 Percent Rule states that the property and interests in property of entities directly or indirectly owned 50 percent or more in the aggregate by one or more blocked persons are considered blocked. How does OFAC interpret indirect ownership as it relates to certain complex ownership structures?

"Indirectly," as used in OFAC s 50 Percent Rule, refers to one or more blocked persons' ownership of shares of an entity through another entity or entities that are 50 percent or more owned in the aggregate by the blocked person(s). OFAC urges persons considering a potential transaction to conduct appropriate due diligence on entities that are party to or involved with the transaction or with which account relationships are maintained in order to determine relevant ownership stakes. Please see FAQ 116 for additional guidance on due diligence standards for intermediary parties to wire transfers. Please refer to the examples below for further guidance on determining whether an entity is blocked pursuant to OFAC's 50 Percent Rule.

Example 1: Blocked Person X owns 50 percent of Entity A, and Entity A owns 50 percent of Entity B. Entity B is considered to be blocked. This is so because Blocked Person X owns, indirectly, 50% of Entity B. In addition, Blocked Person X's 50 percent ownership of Entity A makes Entity A a blocked person. Entity A's 50 percent ownership of Entity B in turn makes Entity B a blocked person.

Example 2: Blocked Person X owns 50 percent of Entity A and 50 percent of Entity B. Entities A and B each own 25 percent of Entity C. Entity C is considered to be blocked. This is so because, through its 50 percent ownership of Entity A, Blocked Person X is considered to indirectly own 25 percent of Entity C; and through its 50 percent ownership of Entity B, Blocked Person X is considered to indirectly own another 25 percent of Entity C. When Blocked Person X's indirect ownership of Entity C through Entity A and Entity B is totaled, it equals 50 percent. Entity C is also considered to be blocked due to the 50 percent aggregate ownership by Entities A and B, which are themselves blocked entities due to Blocked Person X's 50 percent ownership of each.

Example 3: Blocked Person X owns 50 percent of Entity A and 10 percent of Entity B. Entity A also owns 40 percent of Entity B. Entity B is considered to be blocked. This is so because, through its 50 percent ownership of Entity A, Blocked Person X is considered to indirectly own 40 percent of Entity B. When added to Blocked Person X's direct 10 percent ownership of Entity B, Blocked Person X's total ownership (direct and indirect) of Entity B is 50 percent. Entity B is also blocked due to the 50 percent aggregate ownership by Blocked Person X and Entity A, which are themselves both blocked persons.

Example 4: Blocked Person X owns 50 percent of Entity A and 25 percent of Entity B. Entities A and B each own 25 percent of Entity C. Entity C is not considered to be blocked. This is so because, even though Blocked Person X is considered to indirectly own 25 percent of Entity C through its 50 percent ownership of Entity A, Entity B is not 50 percent or more owned by Blocked Person X, and therefore Blocked Person X is not considered to indirectly own any of Entity C through its part ownership of Entity B. Blocked Person X's total ownership (direct and indirect) of Entity C therefore does not equal or exceed 50 percent. Entity A is itself a blocked person, but its ownership of Entity C also does not equal or exceed 50 percent.

Example 5: Blocked Person X owns 25 percent of Entity A and 25 percent of Entity B. Entities A and B each own 50 percent of Entity C. Entity C is not considered to be blocked. This is so because Blocked Person X's 25 percent ownership of each of Entity A and Entity B falls short of 50 percent. Accordingly, neither Entity A nor Entity B is blocked and Blocked Person X is not considered to indirectly own any of Entity C through its part ownership of Entities A or B. [08-13-2014]


402. How does OFAC s 50 Percent Rule apply to situations in which one or more blocked persons owned 50 percent or more of an entity, but subsequent to their designations one or more blocked persons divest their ownership stakes in the entity in a transaction that occurs entirely outside of U.S. jurisdiction such that the resulting combined ownership of the entity by blocked persons is less than 50 percent? How should a person treat property or interests in property of such an entity (1) in future transactions (post-divestment) and (2) that was properly blocked while the entity was owned 50 percent or more by one or more blocked persons?

According to OFAC's 50 Percent Rule, entities are considered blocked if they are owned 50 percent or more (directly or indirectly) in the aggregate by one or more blocked persons. If one or more blocked persons divest their ownership stake such that the resulting combined ownership by blocked persons is less than 50 percent, the entity is no longer considered automatically to be a blocked entity. Any such divestment transactions must occur entirely outside of U.S. jurisdiction and must not involve U.S. persons, as any blocked property or interests in property that come into the possession or control of a U.S. person must be blocked and reported to OFAC, and OFAC does not recognize any subsequent unlicensed transfers, through changes in ownership or otherwise, of such property.

Entities in which the aggregate of one or more blocked persons' ownership stakes has fallen below 50 percent are not considered blocked pursuant to OFAC's 50 Percent Rule, and therefore property of such entities that comes into the United States or the possession or control of a U.S. person while the aggregate of one or more blocked persons' ownership stakes is below 50 percent is not considered blocked by OFAC's 50 Percent Rule. OFAC urges caution when dealing with or processing transactions involving such entities, as those entities may become the subject of future designations or enforcement actions by OFAC. Sufficient due diligence should be conducted to determine that any purported divestment in fact occurred and that the transfer of ownership interests was not merely a sham transaction.

When the property of an entity owned 50 percent or more by a single blocked person comes within the United States or within the possession or control of a U.S. person and is blocked, the property remains blocked unless and until (1) OFAC authorizes the unblocking of or other dealings in the property or (2) OFAC removes the blocked person from the SDN List. The property remains blocked even if the blocked person's ownership of the entity subsequently falls below 50 percent. This is so because the blocked person is considered to have an interest in the blocked property, and OFAC does not recognize the unlicensed transfer of the blocked person s interest after the property becomes blocked in the United States or in the possession or control of a U.S. person. Persons holding such property may request authorization from OFAC's 40 29 weather fort smith ar Division to transfer or otherwise deal in that property (the electronic application can be found on OFAC's website here), and OFAC will evaluate such requests on a case-by-case basis.

Similarly, when the property of an entity owned 50 percent or more in the aggregate by more than one blocked person comes within the United States or in the possession or control of a U.S. person and is blocked, the property remains blocked unless and until (1) OFAC authorizes the unblocking of or other dealings in the property or (2) OFAC removes from the SDN List one or more of the blocked persons such that the aggregate ownership by blocked persons falls below 50 percent. If how to get a credit card at 16 aggregate ownership of the entity by blocked persons falls below 50 percent not due to SDN List removal actions by OFAC but instead due to actions by one or more of the blocked persons, including the entity itself, the property remains blocked. This is so because the group of blocked persons is considered to have an interest in the blocked property, and OFAC does not recognize the unlicensed transfer of any of the blocked persons' interests after the property becomes blocked in the United States or in the possession or control of a U.S. person. Persons holding such property may request authorization from OFAC's Licensing Division to transfer or otherwise deal in that property (the electronic application can be found on OFAC s website here), and OFAC will evaluate such requests on a case-by-case basis. [08-13-2014]


Cross-Programmatic Compliance Services Guidance

495. Why did OFAC issue the Guidance on the Provision of Certain Services Relating to the Requirements of U.S. Sanctions Laws (the Compliance Services Guidance )?

OFAC has received numerous inquiries, many from foreign companies at outreach events, regarding whether U.S. persons may provide, and whether U.S. persons have been able to provide in the past, certain types of legal and compliance services to covered persons. The Compliance Services Guidance provides clarity in response to those inquiries. For purposes of the Compliance Services Guidance, covered persons means U.S. persons and foreign persons other than any person (i) whose property and interests in property are blocked pursuant to any part of 31 C.F.R. chapter V, including persons listed on OFAC s List of Specially Designated Nationals and Blocked Persons (SDN List), or (ii) to whom a U.S. person is prohibited from exporting services or from whom a U.S. person is prohibited from importing services pursuant to any part of 31 C.F.R. chapter V. The Compliance Services Guidance does not describe every allowable service relating to the requirements of U.S. sanctions laws. [01-12-2017]


496. Does the Compliance Services Guidance represent a change in OFAC s policy with respect to the provision of legal and compliance services?

No. The Compliance Services Guidance does not reflect a change in OFAC s policy with respect to the provision of these types of legal and compliance services. OFAC is issuing the Compliance Services Guidance in response to numerous inquiries to ensure that both U.S. and foreign individuals and entities understand that U.S. persons may provide services consistent with the Compliance Services Guidance. [01-12-2017]


497. In providing services consistent with the Compliance Services Guidance to a foreign covered person, can a U.S. person opine on the legality of a transaction under U.S. sanctions laws, including by providing a legal opinion, certification, or other clearance as to the legality of such transaction, where it would be prohibited for a U.S. person to engage in such transaction?

Yes. In providing services to a foreign covered person, a U.S. person may opine on the legality of a transaction under U.S. sanctions laws, including by providing a legal opinion, certification, or other clearance as to the legality of such transaction, where it would be prohibited for a U.S. person to engage in the transaction. U.S. persons may not provide such services to persons who are subject to certain restrictions under OFAC s regulations, such as persons listed on OFAC s SDN List.

U.S. persons, wherever located, may not otherwise approve, finance, facilitate, or guarantee any transaction by a foreign person, including one that meets the definition of a covered person, as defined in FAQ #495, where the transaction by that foreign person would be prohibited by 31 C.F.R. chapter V if performed by a U.S. person or within the United States. For example, U.S. persons could not vote on a transaction (e.g., as a board member), or execute transaction documents (other than as to the legality of the transaction, as specified above), where the transaction would be prohibited if performed by a U.S. person or within the United States. [01-12-2017]


498. The Compliance Services Guidance states that a U.S. person may solicit information from covered persons and conduct research to make a determination as to the legality of transactions under U.S. sanctions laws. What are examples of research that would be allowable under the Compliance Services Guidance?

U.S. persons may conduct research using the internet, including searches of commercial databases, as well as published reference materials for the purpose of determining the legality of transactions under U.S. sanctions laws. In addition, U.S. persons may solicit information regarding a transaction from covered persons, such as, for example, the currency involved; any involvement of U.S. persons, directly or indirectly; and the identity of the covered person s counterparty. [01-12-2017]


499. What type of research exceeds the scope of the Compliance Services Guidance?

A U.S. person may not conduct research that otherwise involves the importation or exportation of services where such transactions are prohibited by any part of 31 C.F.R. chapter V, unless such transactions are authorized by OFAC. [01-12-2017]


Burma Sanctions

481. If there is an active and ongoing investigation against an individual or entity for apparent violations of the Burmese Sanctions Regulations ( BSR ), would that investigation cease now that the President has ended economic and financial sanctions on Burma and the prohibitions in the BSR are no longer in effect?

Pending OFAC enforcement matters will proceed irrespective of the termination of OFAC-administered sanctions on Burma, and OFAC will continue to review app arent violations of the BSR, whether they came to the agency s attention before or after the Burma sanctions program was terminated. Under longstanding practice, apparent sanctions violations are analyzed in light of the laws and regulations that were in place at the time of the underlying activities, and civil and criminal enforcement authorities are applied accordingly. Current or future investigations regarding apparent violations of the BSR will not be impacted by its termination and may result in OFAC enforcement actions after the termination of the BSR. [10-07-2016]


882. For purposes of Burma General License (GL) 2, what organizations are included within the United Nations' "Programmes, Funds, and Other Entities and Bodies, as well as its Specialized Agencies and Related Organizations?"

For an organizational chart of the United Nations, which lists the Programmes, Funds, and Other Entities and Bodies, as well as the Specialized Agencies and Related Organizations covered by this GL, see the following page on the United Nations website: https://www.un.org/en/pdfs/un_system_chart.pdf. [03-25-2021]


883. What does Burma General License 4 authorize?

Burma General License (GL) 4 authorizes, subject to certain conditions, all transactions and activities prohibited by State farm bank compliance test answers Order (E.O.) 14014, that are ordinarily incident and necessary to the wind down of transactions involving, directly or indirectly, Myanmar Economic Corporation Limited (MEC) or Myanma Economic Holdings Public Company Limited (MEHL), or any entity in which MEC or MEHL owns, directly or indirectly, a 50 percent or greater interest, through 12:01 a.m., eastern daylight time, June 22, 2021. Persons unable to wind down transactions prohibited by E.O. 14014 in which such blocked persons have an interest before that time are encouraged to seek formal guidance from OFAC. For the duration of GL 4, non-U.S. persons may wind down transactions involving, directly or indirectly, MEC or MEHL, or any entity in which MEC or MEHL owns, directly or indirectly, a 50 percent or greater interest, without exposure to sanctions under E.O. 14014, provided that such wind down activity is consistent with GL 4. While GL 4 is in effect, wind down transactions may be processed through the U.S. financial system or involve U.S. persons, as long as the transactions comply with the terms and conditions in GL 4. [03-25-2021]

Cuba Sanctions


693. What did the September 9, 2019 amendment to the Cuban Assets Control Regulations (CACR) do?

Effective October 9, 2019 an amendment to the CACR revises certain authorizations for remittances to Cuba to impose new requirements and limitations, eliminates the authorization for donative remittances, and revises the authorization commonly known as the U-turn general license.

  • The September 9, 2019 amendment revises the U-turn general license located at 31 CFR § 515.584(d) to eliminate the authorization for banking institutions subject to U.S. jurisdiction to process U-turn transactions; i.e., funds transfers that originate and terminate outside the United States where neither the originator nor beneficiary is a person subject to U.S. jurisdiction. The amended U-turn general license authorizes banking institutions that are persons subject to U.S. jurisdiction to reject and not require them to block such transactions. For more on changes to the U-turn general license, please see FAQ 757.
  • With respect to remittances, the September 9, 2019 rule amends the general license authorizing family remittances to (1) place a cap of $1,000 as the maximum amount that one remitter can send to one Cuban national as a family remittance per quarter, and (2) exclude close relatives of prohibited officials of the Government of Cuba or close relatives of prohibited members of the Cuban Communist Party as authorized recipients of family remittances. (The prohibited officials themselves were already barred from being recipients of such remittances. See 31 CFR § 515.570(a), as well as 31 CFR § 515.339 for the definition of close relatives .) The September 9, 2019 rule also amends the general license authorizing remittances to certain individuals and independent non-governmental organizations in Cuba to now authorize remittances to certain additional self-employed individuals (See 31 CFR § 515.570(g), as well as 31 CFR § 515.340, for the new definition of self-employed individuals ). Effective October 9, 2019, OFAC eliminated the general license for donative remittances that was previously located at 31 CFR § 515.570(b). For more on changes to remittances, please see FAQ 732. [09-06-2019]

694. What did the June 5, 2019 amendments to CACR do?

Previously, on June 5, 2019, an amendment to the CACR removed an authorization for people-to-people educational travel that was conducted under the auspices of an organization that is subject to U.S. jurisdiction and that sponsors such exchanges to promote people-to-people contact (group people-to-people educational travel). The amendment includes a grandfather clause, however, that authorizes certain group people-to-people educational travel that previously was authorized, so long as the traveler had already completed at least one travel-related transaction (su ch as purchasing a flight or reserving accommodation) prior to June 5, 2019.

On June 16, 2017, the President issued National Security Presidential Memorandum-5 on Strengthening the Policy of the United States Toward Cuba (the NSPM). On November 9, 2017, OFAC amended the CACR to implement the NSPM. On April 17, 2019, the Administration announced regulatory changes to further implement the NSPM and the President s foreign policy toward Cuba, including that the Department of the Treasury would further restrict non-family travel. The regulatory actions taken on June 5, 2019 and September 9, 2019 implement the President s foreign policy toward Cuba as announced on April 17, 2019.

Please note that the Cuba embargo remains in place, and most transactions between the United States, or persons subject to U.S. jurisdiction, and Cuba continue to be prohibited. OFAC continues to enforce jose tejas woodbridge prohibitions of the CACR.

The Department of Commerce s Bureau of Industry and Security (BIS), in coordination with OFAC s June 5, 2019 amendment, amended its Export Administration Regulations (EAR) (15 CFR Parts 730-774). For additional information, see Td canada trust bank customer service number s Cuba webpage. [09-06-2019]


Travel


695. What are the general travel authorizations in the Cuba program?

Travel-related transactions are permitted by general or specific licenses for certain travel related to the 12 categories of activities identified in § 515.560(a).  Those travel-related transactions permitted by general license, subject to specified criteria and conditions, include: family visits; official business of the U.S. government, foreign governments, and certain intergovernmental organizations; journalistic activity; professional research; educational activities; religious activities; athletic competitions by amateur or semi-professional athletes or athletic teams; support for the Cuban people; humanitarian projects; activities of private foundations or research or educational institutes; exportation, importation, or transmission of information or information materials; and certain authorized export transactions. Each person relying on a certain general authorization must retain specific records related to the authorized travel transactions. See §§ 501.601 and 501.602 of Reporting, Procedures and Penalties Regulations for applicable recordkeeping and reporting requirements.

In accordance with NSPM-5, on November 9, 2017, OFAC added a prohibition to restrict certain direct financial transactions with entities and subentities identified on the State Department’s Cuba Restricted List. For a description of the scope of the prohibition on direct financial transactions and the restrictions and exceptions that apply, see 31 CFR § 515.209. In order to implement this prohibition, OFAC made a conforming change to § 515.421 and added corresponding language in the following general licenses: §§ 515.530, 515.534, 515.545, 515.560, 515.561, 515.564, 515.565,
515.566, 515.567, 515.572, 515.573, 515.574, 515.576, 515.577, 515.578, 515.581, 515.584, and
515.590. OFAC has not incorporated this prohibition into certain general licenses in accordance with the exceptions detailed in section 3(a)(iii) of NSPM-5.  

Also, on September 24, 2020, OFAC added a prohibition at § 515.210 of the CACR, which prohibits any person subject to U.S. jurisdiction from lodging, paying for lodging, or making any reservation for or on behalf of a third party to lodge, at any property that the Secretary of State has identified as a property in Cuba that is owned or controlled by the Cuban government; a prohibited official of the Government of Cuba, as defined in § 515.337; a prohibited member of the Cuban Communist Party, as defined in § 515.338; a close relative, as defined in § 515.339, of a prohibited official of the Government of Cuba, or a close relative of a prohibited member of the Cuban Communist Party, when the terms of the general or specific license expressly exclude such a transaction. In furtherance of this change, the State Department is creating a new list, the Cuba Prohibited Accommodations List, to publish the names, addresses, or other identifying details, as relevant, of properties identified as meeting such criteria. In order to implement this prohibition, OFAC made a conforming change to § 515.421 and added corresponding language in the following general licenses:  §§ 515.533, 515.545, 515.559, 515.560, 515.561, 515.563, 515.564, 515.565, 515.566, 515.567, 515.572, 515.574, 515.575, and 515.576. [09-23-2020]


696. Are authorized travelers who have initiated travel arrangements prior to the addition of an entity or subentity on the State Department's Cuba Restricted List required to cancel their Cuba-related travel plans if their travel arrangements involve direct financial transactions with a listed entity or subentity?

Consistent with the Administration's interest in avoiding negative impacts on Americans for arranging lawful travel to Cuba, any travel-related arrangements that include direct financial transactions with entities and subentities that appear on the State Department's Cuba Restricted List will continue to be permitted, provided that those travel arrangements were initiated prior to the State Department's addition of the entity or subentity to the list. Once the State Department adds an entity or subentity to the Cuba Restricted List, new direct financial transactions with the entity or subentity are prohibited, unless authorized by OFAC or exempt. For a complete description of the scope of the prohibition on direct financial transactions and the restrictions and exceptions that apply, see 31 CFR § 515.209. [09-06-2019]


697. Do travelers who fall within the scope of a general license need to submit a written request to OFAC for permission to travel or conduct transactions?

No. No further permission from OFAC is required to engage in transactions by a person who meets all criteria in a general license. Individuals wishing to engage in activities that may fall within the scope of a general license should review the relevant general licenses contained in the CACR to determine whether their travel-related transactions are covered by such general licenses. Persons subject to U.S. jurisdiction who wish to engage in any travel within the 12 categories of activities specified in the CACR that does not meet the requirements of a general license will need to apply for a specific license from OFAC. [11-08-2017]


698. Is travel to Cuba for tourist activities permitted?

No. Consistent with the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), travel-related transactions involving Cuba are only permitted for the 12 categories of activities identified in the CACR. Travel-related transactions for other purposes remain prohibited. [11-08-2017]


699. What constitutes "a close relative" for generally authorized family travel?

OFAC regulations generally authorize persons subject to U.S. jurisdiction and those sharing a dwelling with them as a family to visit a close relative in Cuba, including a close relative who is a Cuban national or a person ordinarily resident in Cuba, or to visit or accompany a close relative who is located in or traveling to Cuba pursuant to the authorizations in § 515.562 (official government business), § 515.563 (journalistic activity), § 515.564(a) (professional research), § 515.565(a)(1)(i) through (iv) and (vi) (educational activities), § 515.566 (religious activities), § 515.575 (humanitarian projects), or § 515.576 (activities of private foundations or research or educational institutes). A close relative is defined as any individual related to a person “by blood, marriage, or adoption who is no more than three generations removed from that person or from a common ancestor with that person.” For a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.339 and § 515.561. In accordance with NSPM-5, OFAC amended the general license in § 515.561 to exclude direct financial transactions with entities and subentities identified on the State Department’s Cuba Restricted List from the authorizations. For a description of the scope of the prohibition on direct financial transactions and the restrictions and exceptions that apply, see 31 CFR § 515.209. [09-06-2019]


700. Who is generally authorized to engage in travel and travel-related transactions for “journalistic activity”?

Section 515.563 of the CACR contains wells fargo home mortgage online bill pay general license that authorizes, subject to conditions, travel- related transactions and other transactions that are directly incident to journalistic activities in Cuba. Among other things, this general license authorizes, subject to conditions, full-time journalists, supporting broadcast or technical personnel, and freelance journalists to travel to Cuba. The traveler’s schedule of activities must not include free time or recreation in excess of that consistent with a full- time schedule. An entire group does not qualify for the general license merely because some members of the group qualify individually. Also, and effective September 24, 2020, OFAC amended this general license to exclude from the authorization lodging, paying for lodging, or making any reservation for or on behalf of a third party to lodge, at any property in Cuba on the Cuba Prohibited Accommodations List to the extent prohibited by § 515.210. For a complete description of the scope of this prohibition, see 31 CFR § 515.210. For a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.563. [09-23-2020]


701. What constitutes generally authorized travel-related transactions for “professional research” in Cuba?

Section 515.564(a) of the CACR contains a general license that authorizes, subject to conditions, travel-related transactions and other transactions that are directly incident to professional research in Cuba. Among other things, this general license authorizes, subject to conditions, professional research in Cuba relating to a traveler’s profession, professional background, or area of expertise, including area of graduate-level full-time study. In accordance with NSPM-5, OFAC amended this general license to exclude direct financial transactions with entities and subentities identified on the State Department’s Cuba Restricted List from its authorization. Also, and effective September 24, 2020, OFAC amended this general license to exclude from the authorization lodging, paying for lodging, or making any reservation for or on behalf of a third party to lodge, at any property in Cuba on the Cuba Prohibited Accommodations List to the extent prohibited by § 515.210. For a complete description of the scope of this prohibition, see 31 CFR § 515.210. The traveler’s schedule of activities must not include free time or recreation in excess of that consistent with a full-time schedule of professional research. An entire group chase bank sign in online banking not qualify for the general license merely because some members of the group qualify individually. For a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.564. 

On September 24, 2020, OFAC eliminated the general license previously contained in §515.564(a)(2) for travel-related transactions and other transactions that are directly incident to attendance at, or organization of, professional meetings or conferences in Cuba. Persons subject to U.S. jurisdiction are no longer generally authorized to attend or organize professional meetings or conferences in Cuba pursuant to this section. OFAC amended § 515.564 to clarify that specific licenses may be issued on a case-by-case basis authorizing the travel-related transactions in § 515.560(c) and other transactions that are related to professional research in Cuba that do not qualify for the general license under 515.564(a) or professional meetings or conferences in Cuba that are not authorized under other travel-related authorizations and that relate to activities otherwise authorized pursuant to the CACR. [09-23-20]


702. What constitutes “educational activities” for generally authorized travel and other transactions?

OFAC amended the general license for educational activities in accordance with NSPM-5 process to authorize travel that was permitted by regulation on January 27, 2011. In addition, OFAC added requirements for certain categories of authorized educational travel that were not permitted by regulation on January 27, 2011 to require that all such travel be conducted under the auspices of an organization that is a person subject to U.S. jurisdiction. In addition, travelers utilizing this authorization must be accompanied by a person subject to U.S. jurisdiction who is a representative of the sponsoring organization. In certain cases where the traveler is an employee, paid consultant, agent, or state farm bank compliance test answers representative traveling individually (not as part of a group), the individual may obtain a certification letter from the sponsoring organization. For a complete description of what such a letter must include and which categories of educational travelers may utilize this authorization, see 31 CFR § 515.565(a)(2).

Among other things, this general license authorizes, subject to conditions, faculty, staff, and students at U.S. academic institutions and secondary schools to engage in certain educational activities, including study abroad programs, in Cuba, Cuban scholars to engage in certain educational activities in the United States, and certain activities to facilitate licensed educational programs. U.S. and Cuban universities may engage in academic exchanges and joint non-commercial academic research under the general license. This provision also authorizes persons subject to U.S. jurisdiction to provide standardized testing services and certain internet-based courses to Cuban nationals. For a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.565.

In accordance with NSPM-5, this general license  excludes direct financial transactions with entities and subentities identified on the State Department’s Cuba Restricted List. For a description of the scope of the prohibition on direct financial transactions and the restrictions and exceptions that apply, see 31 CFR § 515.209 Also, and effective September 24, 2020, OFAC amended this general license to exclude from the authorization lodging, paying for lodging, or making any reservation for or on behalf of a third party to lodge, at any property in Cuba on the Cuba Prohibited Accommodations List to the extent prohibited by § 515.210. For a complete description of the scope of this prohibition, see 31 CFR § 515.210. Effective June 5, 2019, OFAC removed the authorization for group people-to-people educational travel. For more information on that one az credit union app, see FAQ 704.) [09-23-2020]


703. Are secondary schools and secondary school students permitted to engage in travel-related transactions under the general license for “educational activities”?

Yes. Educational exchanges, including study abroad programs, sponsored by Cuban or U.S. secondary schools involving secondary school students’ participation in a formal course of study or in a structured educational program offered by a secondary school or other academic institution, and led by a teacher or other secondary school official are authorized. Such exchanges must take place under the auspices of an organization that is a person subject to U.S. jurisdiction, and a person subject to U.S. jurisdiction who setting up bb 8 sphero an employee, paid consultant, agent, or other representative of the sponsoring organization (including the leading teacher or secondary school official) must accompany each group traveling to Cuba. For a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.565(a)(2)(vi). This authorization allows for participation of a reasonable number of adult chaperones to accompany the secondary school students to Cuba. Also, and effective September 24, 2020, OFAC amended this general license to exclude from the authorization lodging, paying for lodging, or making any reservation for or on behalf of a third party to lodge, at any property in Cuba on the Cuba Prohibited Accommodations List to the extent prohibited by § 515.210. For a complete description of the scope of this prohibition, see 31 CFR § 515.210. [09-23-20]


704. Can travelers still engage in “people-to-people travel” to Cuba on an individual basis or as a part of a group?

Generally, no. Effective June 5, 2019, there is no general license authorizing people-to-people educational activities in Cuba. The term “people-to-people travel” refers to an authorization that previously existed in the CACR, subject to conditions, for persons subject to U.S. jurisdiction to engage in certain educational exchanges in Cuba on an individual basis or under the auspices of an organization that is a person subject to U.S. jurisdiction and sponsors such exchanges to promote people-to-people contact.

On November 9, 2017, in accordance with NSPM-5, OFAC amended the general license for people-to-people educational activities in Cuba to remove the authorization for individual people-to-people educational travel. Effective June 5, 2019, in further accordance with the President’s foreign policy toward Cuba announced in April 2019, OFAC removed the authorization for group people-to-people educational travel in § 515.565(b). There is a grandfather [clause] in § 515.565(b) that authorizes certain group people-to-people educational travel that previously was authorized where the traveler had completed at least one travel-related transaction (such as purchasing a flight or reserving accommodation) prior to June 5, 2019. Also, and effective September 24, 2020, OFAC amended this general license to exclude from the authorization lodging, paying for lodging, or making any reservation for or on behalf of a third party to lodge, at any property in Cuba on the Cuba Prohibited Accommodations List to the extent prohibited by § 515.210. For a complete description of the scope of this prohibition, see 31 CFR § 515.210.

For purposes of that grandfather clause only, an “organization” is an entity subject to U.S. jurisdiction that sponsors educational exchanges that do not involve academic study pursuant to a degree program and that sponsors such exchanges to promote people-to-people contact. To the extent proposed travel falls within the scope of the grandfather clause for group people-to-people educational travel, organizations subject to U.S. jurisdiction may proceed with sponsoring such travel without applying to OFAC for a specific license. It is OFAC’s policy not to grant applications for a specific license authorizing transactions where a general license is available. OFAC will apply a policy of denial with respect to applications for a specific license authorizing prohibited people-to-people travel and related transactions effective June 5, 2019.

For a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.565.

The export or reexport to Cuba of items subject to the EAR, including vessels and aircraft used to provide carrier services, requires separate authorization from the Department of Commerce. See 31 CFR § 515.533. For additional information regarding BIS’s latest travel-related amendments, see BIS’s Cuba webpage. [09-23-2020]


705. Who is generally authorized to engage in travel-related transactions for “religious activities”?

Section 515.566 of the CACR contains a general license that authorizes, subject to conditions, travel- related transactions and other transactions that are directly incident to religious activities in Cuba. All persons subject to U.S. jurisdiction, including religious organizations located in the United States and members and staff of such organizations, are generally authorized to engage in travel-related transactions that are directly incident to engaging in religious activities in Cuba provided, among other things, that the travel must be for the purpose of engaging in a program of religious activities. In accordance with NSPM-5, OFAC amended this general license to exclude from the authorization direct financial transactions with entities and subentities identified on the State Department’s Cuba Restricted List. Also, and effective September 24, 2020, OFAC amended this general license to exclude from the authorization lodging, paying for lodging, or making any reservation for or on behalf of a third party to lodge, at any property in Cuba on the Cuba Prohibited Accommodations List to the extent prohibited by § 515.210. For a complete description of the scope of this prohibition, see 31 CFR § 515.210. The traveler’s schedule of activities must not include free time or recreation in excess of that consistent with a full-time schedule in Cuba. For a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.566. [09-23-2020]


706. What constitutes generally authorized travel under the travel-related category of “public performances, clinics, workshops, athletic and other competitions, and exhibitions” ?

Section 515.567(a) of the CACR contains a general license that authorizes, subject to conditions, travel-related transactions and other transactions that are directly incident to organization of and participation in amateur and semi-professional international sports federation competitions. Transactions incident to the organization of such competitions include marketing related to those specific events in Cuba.  

Effective September 24, 2020, OFAC amended section 515.567 to remove a general authorization related to public performances, clinics, workshops, other athletic or non-athletic competitions, and exhibitions previously found at § 515.567(b). OFAC will consider issuing specific licenses, on a case-by-case basis, for travel-related transactions and other transactions that are directly incident to participation in or organization of a public performance, clinic, workshop, athletic competition not covered by the general license in § 515.567(a), non-athletic competition, or exhibition in Cuba, subject to certain conditions. As a result of these amendments, effective September 24, 2020, the only remaining general license in Section 515.567 for participation in and organization of athletic competitions state farm bank compliance test answers Cuba will be the general license in § 515.567(a) for athletic competitions by amateur or semi-professional athletes or athletic teams.

In accordance with NSPM-5, OFAC amended this general license to exclude from the authorization direct financial transactions with entities and subentities identified on the Cuba Restricted List. Also effective September 24, 2020, OFAC amended this general license to exclude from the authorization lodging, paying for lodging, or making any reservation for or on behalf of a third party to lodge, at any property in Cuba on the Cuba Prohibited Accommodations List to the extent prohibited by § 515.210. For a complete description of the scope of this prohibition, see 31 CFR § 515.210. For a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.567. [09-23-2020]


707. What constitutes “support for the Cuban people” for generally authorized travel and other transactions?

Section 515.574 of the CACR contains a general license that authorizes, subject to conditions, travel-related transactions and other transactions that are intended to provide support for the Cuban people, which include activities of recognized human rights organizations; independent organizations designed to promote a rapid, peaceful transition to democracy; and individuals and non-governmental organizations that promote independent activity intended to strengthen civil society in Cuba. In accordance with NSPM-5, OFAC amended this general license on November 8, 2017 to require that each traveler utilizing this authorization engage in a full-time schedule of activities that enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities and that result in meaningful interactions with individuals in Cuba. OFAC also amended this general license to exclude from the authorization certain direct financial transactions with entities and subentities identified on the State Department’s Cuba Restricted List. Also, and effective September 24, 2020, OFAC amended this general license to exclude from the authorization lodging, paying for lodging, or making any reservation for or on behalf of a third party to lodge, at any property in Cuba on the Cuba Prohibited Accommodations List to the extent prohibited by § 515.210. For a complete description of the scope of this prohibition, see 31 CFR § 515.210. The traveler’s schedule of activities must not include free time or recreation in excess of that consistent with a full-time schedule in Cuba. An entire group does not qualify for this general license merely because some members of the group qualify individually. For a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.574. [09-23-2020]


708. What constitutes “humanitarian projects” for generally authorized transactions, including travel-related transactions?

Section 515.575 of the CACR contains a general license that authorizes, subject to conditions, transactions, including travel-related transactions, that are related to humanitarian projects in or related to Cuba. These authorized humanitarian projects are: medical and health-related projects; construction projects intended to benefit legitimately independent civil society groups; disaster preparedness, relief, and response; historical preservation; environmental projects; projects involving formal or non-formal educational training, within Cuba or off-island, on the following topics: entrepreneurship and business, civil education, journalism, advocacy and organizing, adult literacy, or vocational skills; community-based grassroots projects; projects suitable to the development of small- scale private enterprise; projects that are related to agricultural and rural development that promote independent activity; microfinancing projects, except for loans, extensions of credit, or other financing prohibited by 31 CFR § 515.208; and projects to meet basic human needs. Also, and effective September 24, 2020, OFAC amended this general license to exclude from the authorization lodging, paying for lodging, or making any reservation for or on behalf of a third party to lodge, at any property in Cuba on the Cuba Prohibited Accommodations List to the extent prohibited by § 515.210. For a complete description of the scope of this prohibition, see 31 CFR § 515.210. For persons traveling pursuant to is second harvest heartland a good charity authorization, the traveler’s schedule of activities must not include free time or recreation in excess of that consistent with a full-time schedule in Cuba. An entire group does not qualify for this general license merely because some members of the group qualify individually. For a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.575. [09-23-2020]


709. What constitutes “activities of private foundations or research or educational institutes” for generally authorized travel?

Section 515.576 of the CACR contains a general license that authorizes, subject to conditions, travel- related transactions and other transactions that are directly incident to activities by private foundations or research or educational institutes with an established interest in international relations to collect information related to Cuba for noncommercial purposes, among other things. In accordance with NSPM-5, OFAC amended this general license to exclude from the authorization direct financial transactions with entities and subentities identified on the State Department’s Cuba Restricted List Also, and effective September 24, 2020, OFAC amended this general license to exclude from the authorization lodging, paying for lodging, or making any reservation for or on behalf of a third party to lodge, at any property in Cuba on the Cuba Prohibited Accommodations List to the extent prohibited by § 515.210. For a complete description of the scope of this prohibition, see 31 CFR § 515.210.

The traveler’s schedule of activities must not include free time or recreation in excess of that consistent with a full-time schedule in Cuba. For a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.576.

Additionally, 31 CFR § 515.573(d) authorizes private foundations or research or educational institutes engaging in transactions authorized by § 515.576 to establish a physical presence in Cuba, such as an office. For a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.573(a). [09-23-2020]


710. What constitutes “exportation, importation, or transmission of information or informational materials” for generally authorized travel?

The general license at 31 CFR § 515.545(b)(1) authorizes, subject to conditions, travel-related transactions and other transactions that are directly incident to the exportation, importation, or transmission of information or informational materials. In accordance with NSPM-5, OFAC amended this general license to exclude from the authorization direct financial transactions with entities and subentities identified on the State Department’s Cuba Restricted List. Also, and effective September 24, 2020, OFAC amended this general license to exclude from the authorization lodging, paying for lodging, or making any reservation for or on behalf of a third party to lodge, at any property in Cuba on the Cuba Prohibited Accommodations List to the extent prohibited by § 515.210. For a complete description of the scope of this prohibition, see 31 CFR § 515.210. The traveler’s schedule of activities must not include free time or recreation in excess of that consistent with a full- time schedule in Cuba. For a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.545(b)(1).

The general license at 31 CFR §515.545(b)(2) authorizes, subject to conditions, travel-related transactions and other transactions that are directly incident to professional media or artistic productions of information or informational materials for exportation, importation, or transmission, including the filming or production of media programs (such as movies and television programs), the recording of music, and the creation of artworks in Cuba, provided that the traveler is regularly employed in or has demonstrated professional experience in a field relevant to such professional media or artistic productions. In accordance with NSPM-5, OFAC amended this general license to exclude from the authorization direct financial transactions with entities and subentities identified on the State Department’s Cuba Restricted List. Also, and effective September 24, 2020, OFAC amended this general license to exclude from the authorization lodging, paying for lodging, or making any reservation for or on behalf of a third party to lodge, at any property in Cuba on the Cuba Prohibited Accommodations List to the extent prohibited by § 515.210. For a complete description of the scope of this prohibition, see 31 CFR § 515.210. The traveler’s schedule of activities must not include free time or recreation in excess of that consistent with a full-time schedule. For a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.545(b)(2).

The definition of “information and informational materials” may be found at 31 CFR § 515.332. [09-23-2020]


711. What are examples of a full-time schedule of activities for authorized travelers?

Authorized travelers to Cuba pursuant to most general license categories are expected to maintain a full-time schedule of activities consistent with the terms of the general license(s) pursuant to which they are traveling. For example:

  •     An individual traveling to Cuba for four days pursuant to the authorization for professional research (31 CFR § 515.564(a)), such as a professional  architect, could conduct two days of research on Cuban architectural heritage that directly relates to the traveler’s profession, followed by one day of meetings with Cuban nationals engaging in historical preservation of colonial and baroque buildings in Havana. The following day the traveler could engage in a full day of site visits and fact-finding around Havana at key architectural sites.
  •     An individual traveling pursuant to the authorization for journalistic activities could engage in three full days of interviews with local residents, followed by one full day of follow-up investigative research at local institutions.
  •     A group of friends traveling to Cuba could maintain a full-time schedule volunteering with a recognized non-governmental organization to build a school for underserved Cuban children with the local community (31 CFR § 515.574). The travelers would need to ensure that their activities promote independent activity intended to strengthen civil society in Cuba and that they engage in a full-time schedule of activities that enhance contact with the Cuban people, support civil society state farm bank compliance test answers Cuba, or promote the Cuban people’s independence from Cuban authorities, and result in meaningful interaction between the travelers and individuals in Cuba. [09-23-2020]

712. Can I purchase a ticket to Cuba directly from an airline based or operating out of the United States?

Yes, provided that you are authorized to travel to Cuba pursuant to an OFAC general or specific license. Airlines and travelers are responsible for maintaining records of their Cuba-related transactions for at least five years. [11-08-2017]


713. May a person that qualifies for the general license to provide carrier services transport a third-country national located in the United States to Cuba for travel authorized by a general license under one of the 12 categories of travel listed in Section 515.560 or by specific license from OFAC?

Yes. [11-08-2017]


714. May an individual authorized traveler take a commercial passenger ferry or use his or her private boat to travel to Cuba?

The export or reexport to Cuba of items subject to the EAR, including commercial vessels used to provide carrier services and private vessels, requires separate authorization from the Department of Commerce. See 31 CFR § 515.533. For a complete description of BIS s regulatory requirements, see BIS s Cuba webpage.

While 31 CFR § 515.572 generally authorizes the provision of carrier services, OFAC amended its regulations effective June 5, 2019 to highlight the separate BIS requirements. For a complete description of what the OFAC general license authorizes and the restrictions that apply, see 31 CFR § 515.572. [09-06-2019]


715. Are U.S. vessels, including commercial passenger ferries or private boats, permitted to carry passengers to or from Cuba?

The export or reexport to Cuba of items subject to the EAR, including commercial vessels used to provide carrier services and private vessels, requires separate authorization from the Department of Commerce. See 31 CFR § 515.533. For a complete description of BIS s regulatory requirements, see BIS s Cuba webpage.

While 31 CFR § 515.572 generally authorizes the provision of carrier services, and 31 CFR § 515.572(a)(4) generally authorizes the provision of lodging services by persons subject to U.S. jurisdiction who are authorized to provide carrier services, OFAC amended its regulations effective June 5, 2019 to highlight the BIS requirements. For a complete description of what the OFAC general license authorizes and the restrictions that apply, see 31 CFR § 515.572. [09-06-2019]


716. Are authorized U.S. travelers permitted to travel onboard vessels in Cuba to meet their transportation needs within Cuba?

Travel onboard a vessel in Cuba is permitted for authorized travel. [11-08-2017]


717. Are there any spending limits for authorized U.S. travelers while in Cuba?

There is no specific dollar limit on authorized expenses; however, in accordance with National Security Presidential Memorandum-5 on Strengthening the Policy of the United States Toward Cuba, OFAC amended the Cuban Assets Control Regulations to restrict persons subject to U.S. jurisdiction from engaging in direct financial transactions with entities or subentities identified on the State Department’s Cuba Restricted List, with certain exceptions. See 31 CFR §§ 515.209 and 515.421. Consistent with these authorizations and restrictions, authorized travelers may engage in transactions ordinarily incident to travel within Cuba, including payment of living expenses and the acquisition in Cuba of goods for personal consumption there. OFAC amended 31 CFR § 515.421 to exclude from the authorization lodging, paying for lodging, or making any reservation for or on behalf of a third party to lodge, at any property in Cuba on the State Department’s Cuba Prohibited Accommodations List to the extent prohibited by 31 CFR § 515.210. For a complete description of the scope of this prohibition, see 31 CFR § 515.210. In addition, travelers are authorized to acquire in Cuba and import as accompanied baggage into the United States merchandise for personal use only; effective September 24, 2020, this authorization excludes imports into the United States of Cuban-origin alcohol or tobacco products. OFAC considers “personal use” of an imported item to include giving the item to another individual as a personal gift, but not the transfer of the item to another person for payment or other consideration. Value imports remain subject to the normal limits on duty and tax exemptions for merchandise imported as accompanied baggage and for personal use. [10-26-2020]


718. Are there any CACR restrictions on what foreign persons entering the United States from travel that included Cuba may bring in their accompanied baggage?

A non-U.S. person (i.e., not a U.S. citizen or resident) arriving in the United States is authorized to import Cuban-origin merchandise as accompanied baggage provided the merchandise is not in commercial quantities, is not imported for resale, and does not include Cuban-origin alcohol or tobacco products.  See 31 CFR § 515.569. [09-23-2020]


719. Can I purchase Cuban-origin cigars and/or Cuban-origin rum or other alcohol while traveling in Cuba?

Persons authorized to travel to Cuba may purchase alcohol and tobacco products while in Cuba for personal consumption in Cuba. Please note that effective September 24, 2020, authorized travelers may no longer return to the United States with alcohol and/or tobacco products acquired in Cuba as accompanied baggage for personal use. [09-23-2020]


Источник: https://home.treasury.gov/policy-issues/financial-sanctions/frequently-asked-questions/ofac-consolidated-frequently-asked-questions

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Below we list the top 10 biggest insurers in the U.S. and provide more detail regarding what you should know about each of them. Click on any of the links in the table below to learn more about a particular insurer.

1. State Farm

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State Farm is a great auto insurance company for anyone who wants a local agent, a personalized experience and cheaper-than-average rates.

  • Average six-month premium: $307
  • Market share: 16%
  • Premiums written: $41.1 bn
  • ValuePenguin rating: 4/5
  • J.D. Power customer satisfaction score: 881
  • Read our full State Farm review

State Farm is the largest auto insurance company in the U.S. and possesses 16% of the total available market share. Over 15% of dollars spent on private passenger auto premiums in the U.S. is paid to State Farm.

The company currently employs approximately 60,000 employees and has nearly 19,000 agents. State Farm operates as a mutual insurance company, meaning that it's owned by its policyholders.

Among the largest widely available car insurers in this list, State Farm offered the cheapest car insurance rates in most parts of the U.S.

LEARN MORE: Cheapest Car Insurance Companies

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2. Geico

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We consider Geico to be one of the best auto insurance companies. Geico offers low rates, national availability and an easy shopping experience.

  • Average six-month premium: $390
  • Market share: 13%
  • Premiums written: $35.2 bn
  • ValuePenguin rating: 4/5
  • J.D. Power customer satisfaction score: 871
  • Read our full Geico review

Geico, well known for its advertisements featuring an animated gecko, has served as an underwriter to more than 16 million auto policies, which insure more than 24 million vehicles. The company's size allows it to employ more than 40,000 people across nine regional offices, three service centers and three claims centers.

Geico's original customer base consisted of U.S. government employees and military personnel. Today, the insurance company's customer base has expanded to include people in the private sector.

According to our research of the largest auto insurance carriers, Geico is the best insurer for college students.

LEARN MORE: Best Car Insurance Companies for College Students

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3. Progressive

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Progressive offers especially competitive rates to drivers with previous accidents. However, claims satisfaction ratings and coverage options are average.

  • Average six-month premium: $394
  • Market share: 12%
  • Premiums written: $32.3 bn
  • ValuePenguin editor's rating: 3/5
  • J.D. Power customer satisfaction score: 856
  • Read our full Progressive review

Progressive — the third-biggest insurance company in the country — was established in 1937. The company offers the ability to purchase auto insurance in-person, online or by phone. Alternatively, customers can sign up through independent insurance agents.

The company employs more than 35,000 people and has over 400 offices. Progressive is a publicly traded company.

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4. Allstate

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Allstate typically has better-than-average claims satisfaction ratings, but higher rates. However, the insurer offers a variety of discounts that can make policies more affordable for customers.

  • Average six-month premium: $624
  • Market share: 9%
  • Premiums written: $23.8 bn
  • ValuePenguin editor's rating: 3/5
  • J.D. Power customer satisfaction score: 876
  • Read our full Allstate review

Established in 1931, Allstate is the second-largest publicly traded property and casualty insurance company in America. Similar to State Farm, Allstate has a roster of local agents ready to serve your needs. The company currently employs more than 46,000 people.

Esurance, a subsidiary of Allstate, operates in the same space. According to Allstate, the Esurance brand targets self-directed and brand-sensitive customers, while Allstate is geared towards customers who enjoy local and personal service.

In this list of the biggest car insurance companies, Allstate is our pick for the best customer service.

LEARN MORE: Best Car Insurance Companies for Customer Service

{"backgroundColor":"white","content":"\u003C\/p\u003E\n\n\u003Ch2 id=\"allstate\"\u003E4. Allstate\u003C\/h2\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"full pad-none align-left clearfix\"\u003E\n\u003Cdiv class=\"third pad align-left clearfix\"\u003E\n\u003Cdiv class=\"ReactComponent--root\"\u003E\n \u003Cdiv class=\"js-react-component-rendered js-react-component-AffiliateBanner\" data-component-name=\"AffiliateBanner\"\u003E\n \u003Cdiv class=\"AffiliateTileBanner--root AffiliateTileBanner--align-center \"\u003E\u003Cdiv class=\"AffiliateTileBanner--inner\"\u003E\u003Cdiv class=\"AffiliateTileBanner--wrapper\"\u003E\u003Cdiv class=\"AffiliateTileBanner--image\"\u003E\u003Ca class=\"Link--root AffiliateTileBanner--image-link \" href=\"https:\/\/insurance.mediaalpha.com\/zero-click.html?cu=https:\/\/www.allstate.com\/auto-insurance.aspx&carrier=Allstate;TKzt2XWu22mNOdQNJ2a4RzoV6BRPpNDUopJCfh7rAsgYilC61MaFepVn5p1L6_mIOJTZIazfFd3kcRBYBf9NIndYo-7WqA\" rel=\"nofollow\" target=\"_blank\" title=\"Allstate\"\u003E\u003Cimg alt=\"Allstate\" class=\"Image--root lazyload\" data-src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/allstate-3\" data-srcset=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/allstate-3 1x, \/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/referral_logos\/us\/insurance\/allstate-3 2x\" src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/e_blur:1000,q_1,f_auto\/referral_logos\/us\/insurance\/allstate-3\"\/\u003E\u003C\/a\u003E\u003C\/div\u003E\u003Cdiv class=\"AffiliateTileBanner--button\"\u003E\u003Cdiv class=\"AffiliateButtonV2--root \"\u003E\u003Ca class=\"Link--root Button--root Button--primary Button--fluid Button--square \" href=\"https:\/\/insurance.mediaalpha.com\/zero-click.html?cu=https:\/\/www.allstate.com\/auto-insurance.mediaalpha.com\\\/zero-click.html?cu=https:\\\/\\\/www.allstate.com\\\/auto-insurance.aspx&carrier=Allstate;TKzt2XWu22mNOdQNJ2a4RzoV6BRPpNDUopJCfh7rAsgYilC61MaFepVn5p1L6_mIOJTZIazfFd3kcRBYBf9NIndYo-7WqA\",\"name\":\"Allstate\"}\u003C\/div\u003E\n\u003C\/div\u003E\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"twothird pad align-left clearfix\"\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodePullquote--root\"\u003E\n \u003Cp class=\"ShortcodePullquote--text ShortcodePullquote--blue\"\u003E\n Allstate typically has better-than-average claims satisfaction ratings, but higher rates. However, the insurer offers a variety of discounts that can make policies more affordable for customers. 8 bn\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EValuePenguin editor's rating\u003C\/strong\u003E: 3\/5\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EJ.D. Power customer satisfaction score\u003C\/strong\u003E: 876\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cspan\u003E\u003Ca class=\"ShortcodeLink--root ShortcodeLink--white\" title=\"Read our full Allstate review\" href=\"https:\/\/www.valuepenguin.com\/allstate-auto-insurance-review\"\u003ERead our full Allstate review\u003C\/a\u003E\u003C\/span\u003E\n \u003C\/li\u003E\n \u003C\/ul\u003E\n \u003C\/div\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\n\n\u003C\/p\u003E\n\n\u003Cp\u003E\n\u003C\/div\u003E\n\u003C\/p\u003E\n\n\u003Cp\u003EEstablished in 1931, Allstate is the second-largest publicly traded property and casualty insurance company in America. Similar to State Farm, Allstate has a roster of local agents ready to serve your needs. The company currently employs more than 46,000 people.\u003C\/p\u003E\n\n\u003Cp\u003EEsurance, a subsidiary of Allstate, operates in the same space. According to Allstate, the Esurance brand targets self-directed and brand-sensitive customers, while Allstate is geared towards customers who enjoy local and personal service.\u003C\/p\u003E\n\n\u003Cp\u003EIn this list of the biggest car insurance companies, Allstate is our pick for the best customer service.\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cstrong\u003ELEARN MORE\u003C\/strong\u003E: \u003Cspan\u003E\u003Ca class=\"ShortcodeLink--root ShortcodeLink--black\" title=\"Best Car Insurance Companies for Customer Service\" href=\"https:\/\/www.valuepenguin.com\/best-auto-insurance#service\"\u003EBest Car Insurance Companies for Customer Service\u003C\/a\u003E\u003C\/span\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E","padding":"normal"}

5. Bank of america unemployment debit card ky a Quote","category":"auto_insurance_companies","className":"","cloudinaryImageName":"referral_logos\/us\/insurance\/usaa-3","cssNamespace":"AffiliateTileBanner","context":"","disclaimers":[""],"isButtonSquare":true,"isUnavailable":false,"link":"https:\/\/www.usaa.com\/inet\/wc\/insurance-products?akredirect=true","name":"USAA"}

USAA is one of the best auto insurers in the country. If you meet their qualification criteria, you'll enjoy extremely competitive rates, great customer service and speedy claims responses. The only downside is USAA's restricted membership.

  • Average six-month premium: $223
  • Market share: 6%
  • Premiums written: $15.2 bn
  • ValuePenguin editor's rating: 4.5/5
  • J.D. Power customer satisfaction score: 890
  • Read our full USAA review

USAA was founded by 25 Army officers who decided to insure each other's vehicles in 1922. Today, the company serves millions of members associated with the U.S. military, including current and former service members, family of service members, and cadets or midshipmen.

USAA is headquartered in San Antonio. The corporate campus' length extends three-quarters of a mile. USAA is the largest private company located in San Antonio.

Because of its focus on the U.S. armed forces, USAA is our top pick for the best and cheapest car insurance for veterans and military service members.

LEARN MORE: Best Car Insurance Companies for Veterans and Military Families

{"backgroundColor":"white","content":"\u003C\/p\u003E\n\n\u003Ch2 id=\"usaa\"\u003E5. USAA\u003C\/h2\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"full pad-none align-left clearfix\"\u003E\n\u003Cdiv class=\"third pad align-left clearfix\"\u003E\n\u003Cdiv class=\"ReactComponent--root\"\u003E\n \u003Cdiv class=\"js-react-component-rendered js-react-component-AffiliateBanner\" data-component-name=\"AffiliateBanner\"\u003E\n \u003Cdiv class=\"AffiliateTileBanner--root AffiliateTileBanner--align-center \"\u003E\u003Cdiv class=\"AffiliateTileBanner--inner\"\u003E\u003Cdiv class=\"AffiliateTileBanner--wrapper\"\u003E\u003Cdiv class=\"AffiliateTileBanner--image\"\u003E\u003Ca class=\"Link--root AffiliateTileBanner--image-link \" href=\"https:\/\/www.usaa.com\/inet\/wc\/insurance-products?akredirect=true\" rel=\"nofollow\" target=\"_blank\" title=\"USAA\"\u003E\u003Cimg alt=\"USAA\" class=\"Image--root lazyload\" data-src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/usaa-3\" data-srcset=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/usaa-3 1x, \/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/referral_logos\/us\/insurance\/usaa-3 2x\" src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/e_blur:1000,q_1,f_auto\/referral_logos\/us\/insurance\/usaa-3\"\/\u003E\u003C\/a\u003E\u003C\/div\u003E\u003Cdiv class=\"AffiliateTileBanner--button\"\u003E\u003Cdiv class=\"AffiliateButtonV2--root \"\u003E\u003Ca class=\"Link--root Button--root Button--primary Button--fluid Button--square \" href=\"https:\/\/www.usaa.com\/inet\/wc\/insurance-products?usaa.com\\\/inet\\\/wc\\\/insurance-products?akredirect=true\",\"name\":\"USAA\"}\u003C\/div\u003E\n\u003C\/div\u003E\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"twothird pad align-left clearfix\"\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodePullquote--root\"\u003E\n \u003Cp class=\"ShortcodePullquote--text ShortcodePullquote--blue\"\u003E\n USAA is one of the best auto insurers in the country. If you meet their qualification criteria, you'll enjoy extremely competitive rates, great customer service and speedy claims responses. The only downside is USAA's restricted membership.2 bn\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EValuePenguin editor's rating\u003C\/strong\u003E: 4.5\/5\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EJ.D. Power customer satisfaction score\u003C\/strong\u003E: 890\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cspan\u003E\u003Ca class=\"ShortcodeLink--root ShortcodeLink--white\" title=\"Read our full USAA review\" href=\"https:\/\/www.valuepenguin.com\/usaa-insurance-review\"\u003ERead our full USAA review\u003C\/a\u003E\u003C\/span\u003E\n \u003C\/li\u003E\n \u003C\/ul\u003E\n \u003C\/div\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\n\n\u003C\/p\u003E\n\n\u003Cp\u003E\n\u003C\/div\u003E\n\u003C\/p\u003E\n\n\u003Cp\u003EUSAA was founded by 25 Army officers who decided to insure each other's vehicles in 1922. Today, the company serves millions of members associated with the U.S. military, including current and former service members, family of service members, and cadets or midshipmen.\u003C\/p\u003E\n\n\u003Cp\u003EUSAA is headquartered in San Antonio. The corporate campus' length extends three-quarters of a mile. USAA is the largest private company located in San Antonio.\u003C\/p\u003E\n\n\u003Cp\u003EBecause of its focus on the U.S. armed forces, USAA is our top pick for the best and cheapest car insurance for veterans and military service members.\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cstrong\u003ELEARN MORE\u003C\/strong\u003E: \u003Cspan\u003E\u003Ca class=\"ShortcodeLink--root ShortcodeLink--black\" title=\"Best Car Insurance Companies for Veterans and Military Families\" href=\"https:\/\/www.valuepenguin.com\/best-cheap-car-insurance-veterans-and-military-members\"\u003EBest Car Insurance Companies for Veterans and Military Families\u003C\/a\u003E\u003C\/span\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E","padding":"normal"}

6. Liberty Mutual

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Liberty Mutual's rates vary by location more than the typical insurer, and customers rank the company's claims satisfaction process as below average.

  • Average six-month premium: $627
  • Market share: 5%
  • Premiums written: $12.1 bn
  • ValuePenguin editor's rating: 3.5/5
  • J.D. Power customer satisfaction score: 867
  • Read our full Liberty Mutual review

Liberty Mutual is one of the largest insurance companies in the U.S. and has been around for over 100 years, including a large international presence — with operations in 17 countries. The international company sells property and casualty, health and life insurance policies.

Liberty Mutual's auto insurance offerings can be accessed via its call center, website, a local Liberty Mutual agent or broker, or representatives from its network of regional subsidiaries. One thing to note about Liberty Mutual's coverage is that rates are guaranteed for a year.

{"backgroundColor":"white","content":"\u003C\/p\u003E\n\n\u003Ch2 id=\"liberty-mutual\"\u003E6. Liberty Mutual\u003C\/h2\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"full pad-none align-left clearfix\"\u003E\n\u003Cdiv class=\"third pad align-left clearfix\"\u003E\n\u003Cdiv class=\"ReactComponent--root\"\u003E\n \u003Cdiv class=\"js-react-component-rendered js-react-component-AffiliateBanner\" data-component-name=\"AffiliateBanner\"\u003E\n \u003Cdiv class=\"AffiliateTileBanner--root AffiliateTileBanner--align-center \"\u003E\u003Cdiv class=\"AffiliateTileBanner--inner\"\u003E\u003Cdiv class=\"AffiliateTileBanner--wrapper\"\u003E\u003Cdiv class=\"AffiliateTileBanner--image\"\u003E\u003Ca class=\"Link--root AffiliateTileBanner--image-link \" href=\"https:\/\/insurance.mediaalpha.com\/zero-click.html?cu=https:\/\/www.libertymutual.com\/&carrier=Liberty%20Mutual;TKzt2XWu22mNOdQNJ2a4RzoV6BRPpNDUopJCfh7rAsgYilC61MaFepVn5p1L6_mIOJTZIazfFd3kcRBYBf9NIndYo-7WqA\" rel=\"nofollow\" target=\"_blank\" title=\"Liberty Mutual\"\u003E\u003Cimg alt=\"Liberty Mutual\" class=\"Image--root lazyload\" data-src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/libertymutual-3\" data-srcset=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/libertymutual-3 1x, \/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/referral_logos\/us\/insurance\/libertymutual-3 2x\" src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/e_blur:1000,q_1,f_auto\/referral_logos\/us\/insurance\/libertymutual-3\"\/\u003E\u003C\/a\u003E\u003C\/div\u003E\u003Cdiv class=\"AffiliateTileBanner--button\"\u003E\u003Cdiv class=\"AffiliateButtonV2--root \"\u003E\u003Ca class=\"Link--root Button--root Button--primary Button--fluid Button--square \" href=\"https:\/\/insurance.mediaalpha.com\/zero-click.html?cu=https:\/\/www.libertymutual.mediaalpha.com\\\/zero-click.html?cu=https:\\\/\\\/www.libertymutual.com\\\/&carrier=Liberty%20Mutual;TKzt2XWu22mNOdQNJ2a4RzoV6BRPpNDUopJCfh7rAsgYilC61MaFepVn5p1L6_mIOJTZIazfFd3kcRBYBf9NIndYo-7WqA\",\"name\":\"Liberty Mutual\"}\u003C\/div\u003E\n\u003C\/div\u003E\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"twothird pad align-left clearfix\"\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodePullquote--root\"\u003E\n \u003Cp class=\"ShortcodePullquote--text ShortcodePullquote--blue\"\u003E\n Liberty Mutual's rates vary by location more than the typical insurer, and customers rank the company's claims satisfaction process as below average. 1 bn\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EValuePenguin editor's rating\u003C\/strong\u003E: 3.5\/5\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EJ.D. Power customer satisfaction score\u003C\/strong\u003E: 867\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cspan\u003E\u003Ca class=\"ShortcodeLink--root ShortcodeLink--white\" title=\"Read our full Liberty Mutual review\" href=\"https:\/\/www.valuepenguin.com\/liberty-mutual-insurance-review\"\u003ERead our full Liberty Mutual review\u003C\/a\u003E\u003C\/span\u003E\n \u003C\/li\u003E\n \u003C\/ul\u003E\n \u003C\/div\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\n\n\u003C\/p\u003E\n\n\u003Cp\u003E\n\u003C\/div\u003E\n\u003C\/p\u003E\n\n\u003Cp\u003ELiberty Mutual is one of the largest insurance companies in the U.S. and has been around for over 100 years, including a large international presence \u2014 with operations in 17 countries. The international company sells property and casualty, health and life insurance policies.\u003C\/p\u003E\n\n\u003Cp\u003ELiberty Mutual's auto insurance offerings can be accessed via its call center, website, a local Liberty Mutual agent or broker, or representatives from its network of regional subsidiaries. One thing to note about Liberty Mutual's coverage is that rates are guaranteed for a year.\u003C\/p\u003E\n\n\u003Cp\u003E\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E","padding":"normal"}

7. Farmers

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Farmers offers decent discounts, coverage options and great customer service. However, Farmers' non-competitive rates may be cost-prohibitive for some shoppers.

  • Average six-month premium: $553
  • Market share: 4%
  • Premiums written: $10.7 bn
  • ValuePenguin editor's rating: 4/5
  • J.D. Power customer satisfaction score: 872
  • Read our full Farmers review

Farmers began as an insurance company providing coverage to farmers' vehicles. Since then it has evolved to become the seventh-largest insurance company in the country.

It’s hard to find an insurance company that offers more products than Farmers. It offers basic auto insurance, pet insurance and even investment products among a variety of other insurance products. Farmers employs nearly 13,000 state farm bank compliance test answers, underwriting more than 19 million policies across 50 states.

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8. Nationwide

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Nationwide is below average for affordability, and its customer reviews tend to veer negative. Nationwide offers standard coverages and discounts you’d expect from a large national insurer.

  • Average six-month premium: $466
  • Market share: 3%
  • Premiums written: $6.6 bn
  • ValuePenguin editor's rating: 3.5/5
  • J.D. Power customer satisfaction score: 876
  • Read our full Nationwide review

Nationwide does business across several verticals — including financial services, commercial lines and personal lines — in all 50 U.S. states. Nationwide has contributed more than $430 million to nonprofit organizations since 2000.

Nationwide has a motto called "On Your Side" that influences how auto insurance claims are handled, and how policies and premiums are determined. The company also recommends getting an annual checkup to ensure policyholders understand their benefits and declarations, as well as new discounts or changes to keep premiums steady and coverage adequate. Nationwide calls this consultation its "On Your Side" Review.

Among this list of the largest car insurance companies, Nationwide offers the best deals for customers looking to bundle their home and auto insurance policies.

LEARN MORE: Best Car Insurance Companies for Bundling Home and Auto Insurance

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9. American Family

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American Family is a solid choice for auto insurance. The company offers decent rates, which have the potential to be great when policyholders utilize some of its many discounts.

  • Average six-month premium: $387
  • Market share: 2% victoria secret pink yoga leggings
  • Premiums written: $5.8 bn
  • ValuePenguin editor's rating: 4/5
  • J.D. Power customer satisfaction score: 862
  • Read our full American Family review

American Family was established with the initial goal of insuring farmers. In the 1930s, the company expanded and began to focus on insuring non-farmers as well. Today, the company is one of the biggest insurance companies in the U.S., and the largest insurer by market share in the state of Wisconsin.

The company is known for its extensive discount catalogue that can make its already decent rates even more affordable for customers. However, American Family currently underwrites policies in just 17 states.

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10. Travelers

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Moderate complaint ratings and a variety of discounts make Travelers a good choice for auto insurance coverage.

  • Average six-month premium: $623
  • Market share: 2%
  • Premiums written: $5.5 bn
  • ValuePenguin editor's rating: 3.5/5
  • J.D. Power customer satisfaction score: 861
  • Read our full Travelers review

Travelers is more than 160 years old, making it one of the oldest insurance companies operating today. In fact, Travelers issued its first auto insurance policy in 1897, before the Ford Model T was invented.

The company has more than 30,000 employees and 13,500 independent agents and brokers in multiple countries — including the United States, Canada and Brazil.

Notably, Travelers offers a rate pricing program known as IntelliDrive, which determines your rates by assessing your safe driving behavior via a smartphone app. Enrolling in IntelliDrive can potentially reduce your annual insurance rates by as much as 20% if you exhibit good driving habits.

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List of the largest car insurance companies by state

State Farm is the largest insurer in our list, taking the top spot in 33 states and the District of Columbia. After State Farm, Geico was most frequently the largest insurer, taking the biggest market share in 10 states. Progressive was the largest car insurance carrier in seven states, and MAPFRE in just one.

To learn more about the largest car insurance companies in your state, click on the relevant link in the list below.

Largest auto insurance companies in each state

Big vs. small insurance companies

The trade-off between large insurance companies and small ones typically involves giving up competitive rates for an improved customer experience.

  • When using a small insurance company for your auto insurance, you'll likely communicate exclusively with one insurance agent.
  • While you might lose a personal connection when selecting a major insurer, the largest companies tend to have more financial stability. In fact, these carriers underwrite and pay out billions of dollars per year, and still often leverage their resources to offer drivers lower insurance rates.

You may also need to worry about solvency if you choose a policy from a smaller company due to lack of financial strength. If you manage to find a small insurer with a base level of financial stability that you're comfortable with, consider how much you're willing to pay for better service. If you value great service, you might prefer a small insurance company.

Below, we compared the 10 largest auto insurance companies according to their financial strength rating by AM Best.

A++/SuperiorState Farm, Geico, USAA
A+/SuperiorProgressive, Allstate, Nationwide
A/ExcellentLiberty Mutual, Farmers, Travelers, American Family

Another consideration is availability, coverage options and discounts. While you're likely to have a more personalized experience with a small insurance company, it may not have the availability, benefits and discounts that large insurance companies do. And the major or biggest insurance companies often have representatives that are still available to speak with policyholders 24/7.

Mutual vs. stock insurance companies

The main difference between mutual and stock insurance companies is the ownership configuration — stock insurance companies are privately- or publicly-owned companies that offer voting rights to stockholders. Mutual insurance companies, however, are owned by their policyholders.

Since stockholders benefit from the stock's appreciation, people argue that the short-term interests of investors don't always align with the long-term interest of the company. Many feel that mutual insurance companies are better because the policyholders' interests align well with what's best for the company, specifically lowering insurance rates and paying out dividends to attract more customers.

Below, we list the top 10 largest auto insurance companies by type, excluding USAA, which is an insurance exchange for military personnel.

State FarmGeico
Liberty MutualAllstate
American FamilyProgressive
NationwideFarmers
Travelers

Choosing the right insurer for you

Among all the large auto insurance companies how to create a facebook business ad account there, it's still important to pick a carrier that's best for your unique situation. We always recommend comparing quotes from multiple insurers in order to find cheap rates that fit your personal driver profile and history.

The type of auto insurance policy you choose — whether minimum or full coverage — will affect your quote, so it helps to have a general idea of which coverages you'd like before getting one.

  • Minimum-coverage car insurance is specified by the minimum auto insurance requirements in your state.
  • Full-coverage car insurance adds comprehensive and collision coverage to your policy in order to protect you against physical damage to your vehicle.

We typically suggest all drivers consider purchasing full-coverage car insurance, particularly if their vehicle is worth more than $3,000.

A quick and simple way to compare multiple car insurance quotes is to use our tool. You can start by entering your ZIP code below.

ValuePenguin works with trusted national carriers to help you find your best rate quickly, simply and easily — for free.

As an alternative, many insurers offer their own free online quote tools you can access directly through their websites, or you might consider working with an insurance agent to help you with the process.

Expert Insights to Help You Make Smarter Financial Decisions

ValuePenguin has curated an exclusive panel of professionals, spanning various areas of expertise, to help dissect difficult subjects and empower you to make smarter financial decisions. Read on for more auto insurance insights. 

  1. Flo from Progressive and Jake from State Farm are household names by now. How does the perceived value of larger companies impact the smaller, yet potentially just as competitive, ones?
  2. How does market share ownership impact a customer's perception of quality of service?
  3. Generally speaking, what is the impact on customer satisfaction after an acquisition and/or consolidation?
  4. Living in this digital revolution, is it necessary for companies, like insurance providers, to maintain localized agents and personalized experiences?

The commentary provided by these industry experts represent their viewpoints and opinions alone.

{"backgroundColor":"white","content":"\u003C\/p\u003E\n\n\u003Cp\u003EValuePenguin has curated an exclusive panel of professionals, spanning various areas of expertise, to help dissect difficult subjects and empower you to make smarter financial decisions. Read on for more auto insurance insights.\u00a0\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodeList--root\"\u003E\n\n \u003Cdiv class=\"ShortcodeList--content ShortcodeList--content-margin\"\u003E\n \u003Cdiv class=\"ShortcodeList--column\"\u003E\n \u003Col class=\"ListOrdered--root\"\u003E\n \u003Cli class=\"ListOrdered--list-item\"\u003EFlo from Progressive and Jake from State Farm are household names by now. How does the perceived value of larger companies impact the smaller, yet potentially just as competitive, ones?\u003C\/li\u003E\n \u003Cli class=\"ListOrdered--list-item\"\u003EHow does market share ownership impact a customer's perception of quality of service?\u003C\/li\u003E\n \u003Cli class=\"ListOrdered--list-item\"\u003EGenerally speaking, what is the impact on customer satisfaction after an acquisition and\/or consolidation?\u003C\/li\u003E\n \u003Cli class=\"ListOrdered--list-item\"\u003ELiving in this digital revolution, is it necessary for companies, like insurance providers, to maintain localized agents and personalized experiences?\u003C\/li\u003E\n \u003C\/ol\u003E\n \u003C\/div\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\n\n\u003C\/p\u003E\n\n\u003Chr\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"full pad-none align-left clearfix\"\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"third pad-half align-left clearfix\"\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodeImage--root left\" \u003E\n \u003Cdiv class=\"ShortcodeImage--image-container \"\u003E\n \u003Cimg alt=\"headshot of expert\" class=\"ShortcodeImage--image lazyload\" style=\"width: 80px;\" data-src=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/deanne-butchey_zwclbi\" src=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,e_blur:1000,f_auto,h_1600,q_1,w_80\/v1\/deanne-butchey_zwclbi\" data-srcset=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/deanne-butchey_zwclbi 1x, http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/craig-seidelson_rjse2e\" src=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,e_blur:1000,f_auto,h_1600,q_1,w_80\/v1\/craig-seidelson_rjse2e\" data-srcset=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/craig-seidelson_rjse2e 1x, http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,f_auto,h_1600,q_auto,w_80\/v1\/craig-seidelson_rjse2e 2x\"\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodeList--root \"\u003E\n\n \u003Cdiv class=\"ShortcodeList--content\"\u003E\n \u003Cdiv class=\"ShortcodeList--column\"\u003E\n \u003Cul class=\"ListUnordered--root ListUnordered--plain\"\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EDr. cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/christopher-marquette_zacncd\" src=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,e_blur:1000,f_auto,h_1600,q_1,w_80\/v1\/christopher-marquette_zacncd\" data-srcset=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/christopher-marquette_zacncd 1x, http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/expert-advice-headshots_sfuxjr\" src=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,e_blur:1000,f_auto,h_1600,q_1,w_80\/v1\/expert-advice-headshots_sfuxjr\" data-srcset=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/expert-advice-headshots_sfuxjr 1x, http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/david-marlett_wopjqh\" src=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,e_blur:1000,f_auto,h_1600,q_1,w_80\/v1\/david-marlett_wopjqh\" data-srcset=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/david-marlett_wopjqh 1x, http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,f_auto,h_1600,q_auto,w_80\/v1\/david-marlett_wopjqh 2x\"\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodeList--root \"\u003E\n\n \u003Cdiv class=\"ShortcodeList--content\"\u003E\n \u003Cdiv class=\"ShortcodeList--column\"\u003E\n \u003Cul class=\"ListUnordered--root ListUnordered--plain\"\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EDavid C. Marlett, PhD, CPCU\u003C\/strong\u003E\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n Managing Director, Brantley Risk and Insurance Center\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cspan\u003E\u003Ca class=\"ShortcodeLink--root ShortcodeLink--black\" title=\"Read Answer\" href=\"#expert-david-c-marlett\"\u003ERead Answer\u003C\/a\u003E\u003C\/span\u003E\n \u003C\/li\u003E\n \u003C\/ul\u003E\n \u003C\/div\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\n\n\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"third pad-half align-left clearfix\"\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodeImage--root left\" \u003E\n \u003Cdiv class=\"ShortcodeImage--image-container \"\u003E\n \u003Cimg alt=\"headshot of expert\" class=\"ShortcodeImage--image lazyload\" style=\"width: 80px;\" data-src=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/dena-hale_fnkdy0\" src=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,e_blur:1000,f_auto,h_1600,q_1,w_80\/v1\/dena-hale_fnkdy0\" data-srcset=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/dena-hale_fnkdy0 1x, http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,f_auto,h_1600,q_auto,w_80\/v1\/dena-hale_fnkdy0 2x\"\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodeList--root \"\u003E\n\n \u003Cdiv class=\"ShortcodeList--content\"\u003E\n \u003Cdiv class=\"ShortcodeList--column\"\u003E\n \u003Cul class=\"ListUnordered--root ListUnordered--plain\"\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EDr. Dena H. Hale\u003C\/strong\u003E\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n Assistant Professor of Sales and Marketing\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cspan\u003E\u003Ca class=\"ShortcodeLink--root ShortcodeLink--black\" title=\"Read Answer\" href=\"#expert-dena-hale\"\u003ERead Answer\u003C\/a\u003E\u003C\/span\u003E\n \u003C\/li\u003E\n \u003C\/ul\u003E\n \u003C\/div\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\n\n\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Chr\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"third pad-half align-left clearfix\"\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodeImage--root left\" \u003E\n \u003Cdiv class=\"ShortcodeImage--image-container \"\u003E\n \u003Cimg alt=\"headshot of expert\" class=\"ShortcodeImage--image lazyload\" style=\"width: 80px;\" data-src=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/expert-advice-savino-stevens_xyyzuw\" src=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,e_blur:1000,f_auto,h_1600,q_1,w_80\/v1\/expert-advice-savino-stevens_xyyzuw\" data-srcset=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/expert-advice-savino-stevens_xyyzuw 1x, http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,f_auto,h_1600,q_auto,w_80\/v1\/expert-advice-savino-stevens_xyyzuw 2x\"\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodeList--root \"\u003E\n\n \u003Cdiv class=\"ShortcodeList--content\"\u003E\n \u003Cdiv class=\"ShortcodeList--column\"\u003E\n \u003Cul class=\"ListUnordered--root ListUnordered--plain\"\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003ESteven L. cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/prachi-gala_bklcn2\" src=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,e_blur:1000,f_auto,h_1600,q_1,w_80\/v1\/prachi-gala_bklcn2\" data-srcset=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/prachi-gala_bklcn2 1x, http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/jacklyn-stevenson_h9vb2l\" src=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,e_blur:1000,f_auto,h_1600,q_1,w_80\/v1\/jacklyn-stevenson_h9vb2l\" data-srcset=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/jacklyn-stevenson_h9vb2l 1x, http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/expert-advice-headshots_sfuxjr\" src=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,e_blur:1000,f_auto,h_1600,q_1,w_80\/v1\/expert-advice-headshots_sfuxjr\" data-srcset=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/expert-advice-headshots_sfuxjr 1x, http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.\u003C\/p\u003E\n\n \n \u003C\/p\u003E\n\u003C\/div\u003E\n\n\u003C\/div\u003E\n\n","padding":"double"}

headshot of expert

Deanne Butchey, PhD

Teaching Professor, Finance; Faculty Advisor, Phoenician Investment Fund (PIF); Financial Management Association (FMA) @ FIU

Flo from Progressive and Jake from State Farm are household names by now. How does the perceived value of larger companies impact the smaller, yet potentially just as competitive, ones?

It depends on the industry. In financial services, trust and the ability to connect with the company is critical in instilling confidence in the minds of the consumers. Smaller companies that do not have an easily identifiable spokesperson may not enjoy as widespread acceptance or trust. Eventually, word of mouth and personalized experiences with the smaller company may ease these concerns.

How does market share ownership impact a customer's perception of quality of service?

In scientific research, it is a known fact that a small percentage of influencers who may be viewed as "informed individuals" have the potential to lead others down a specific path. Many times when a company has a significant market share, consumers believe that existing clientele have superior information about the quality of the good or service. It is for this reason that positive online reviews are highly sought after.

Generally speaking, what is the impact on customer satisfaction after an acquisition and/or consolidation?

It depends how effectively the integration or consolidation takes place. If it is seamless and customers view the expansion of services offered as being beneficial to them, they will be highly satisfied. On the other hand, if there are hiccups or disruptions in service in the early stages of integration, the acquired or consolidated company will lose its original customers.

Living in this digital revolution, is it necessary for companies, like insurance providers, to maintain localized agents and personalized experiences?

I don’t believe it is necessary to maintain local agents, but it is important that the person on the other line or on the chat is culturally sensitive. Seemingly personalized experiences, whether it is through a live agent or artificial intelligence is invaluable.

{"backgroundColor":"white","content":"\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodeImage--root left\" \u003E\n \u003Cdiv class=\"ShortcodeImage--image-container \"\u003E\n \u003Cimg alt=\"headshot of expert\" class=\"ShortcodeImage--image lazyload\" style=\"width: 60px;\" data-src=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_60\/v1\/deanne-butchey_zwclbi\" src=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,e_blur:1000,f_auto,h_1600,q_1,w_60\/v1\/deanne-butchey_zwclbi\" data-srcset=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_60\/v1\/deanne-butchey_zwclbi 1x, http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,f_auto,h_1600,q_auto,w_60\/v1\/deanne-butchey_zwclbi 2x\"\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Ch3 id=\"expert-deanne-butchey\"\u003EDeanne Butchey, PhD\u003C\/h3\u003E\n\n\u003Cp\u003ETeaching Professor, Finance; Faculty Advisor, Phoenician Investment Fund (PIF); Financial Management Association (FMA) @ FIU\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodeToggle--root ShortcodeToggle--article \" id=\u003E\n \u003Cbutton class=\"ShortcodeToggle--toggle\" onclick=\"this.parentNode.classList.toggle('ShortcodeToggle--open');\"\u003E\u003Cp class=\"ShortcodeToggle--label\"\u003ESee their advice\u003C\/p\u003E\u003C\/button\u003E\n \u003Cdiv class=\"ShortcodeToggle--contents-wrapper\"\u003E\n \u003Cdiv class=\"ShortcodeToggle--contents\"\u003E\n \u003C\/p\u003E\n\n\u003Ch4\u003EFlo from Progressive and Jake from State Farm are household names by now. How does the perceived value of larger companies impact the smaller, yet potentially just as competitive, ones?\u003C\/h4\u003E\n\n\u003Cp\u003EIt depends on the industry. In financial services, trust and the ability to connect with the company is critical in instilling confidence in the minds of the consumers. Smaller companies that do not have an easily identifiable spokesperson may not enjoy as widespread acceptance or trust. Eventually, word of mouth and personalized experiences with the smaller company may ease these concerns.\u003C\/p\u003E\n\n\u003Ch4\u003EHow does market share ownership impact a customer's perception of quality of service?\u003C\/h4\u003E\n\n\u003Cp\u003EIn scientific research, it is a known fact that a small percentage of influencers who may be viewed as \"informed individuals\" have the potential to lead others down a specific path. Many times when a company has a significant market share, consumers believe that existing clientele have superior information about the quality of the good or service. It is for this reason that positive online reviews are highly sought after.\u003C\/p\u003E\n\n\u003Ch4\u003EGenerally speaking, what is the impact on customer satisfaction after an acquisition and\/or consolidation?\u003C\/h4\u003E\n\n\u003Cp\u003EIt depends how effectively the integration or consolidation takes place. If it is seamless and customers view the expansion of services offered as being beneficial to them, they will be highly satisfied. On the other hand, if there are hiccups or disruptions in service in the early stages of integration, the acquired or consolidated company will lose its original customers.\u003C\/p\u003E\n\n\u003Ch4\u003ELiving in this digital revolution, is it necessary for companies, like insurance providers, to maintain localized agents and personalized experiences?\u003C\/h4\u003E\n\n\u003Cp\u003EI don\u2019t believe it is necessary to maintain local agents, but it is important that the person on the other line or on the chat is culturally sensitive. Seemingly personalized experiences, whether it is through a live agent or artificial intelligence is invaluable.\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodeAlign--root ShortcodeAlign--horizontal-center\"\u003E\n \u003Cdiv class=\"ShortcodeAlign--container\"\u003E \n \u003Cspan\u003E\u003Ca class=\"ShortcodeLink--root Button--root Button--primary Button--auto-width\" title=\"Back to all experts\" href=\"#expertadvice\"\u003EBack to all experts\u003C\/a\u003E\u003C\/span\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\n\u003C\/p\u003E\n\n\u003Cp\u003E\n \u003C\/div\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\n\n","padding":"double"}

headshot of expert

Dr. Craig Seidelson

Assistant Professor Operations and Supply Chain Management, University of Indianapolis

Flo from Progressive and Jake from State Farm are household names by now. How does the perceived value of larger companies impact the smaller, yet potentially just as competitive, ones?

Companies in the U.S. spent nearly $250 billion on ads in 2020. When it comes to financing national marketing campaigns, large companies have a distinct advantage over their smaller counterparts. This spending advantage becomes a business advantage when ads create sufficient brand loyalty that consumers are willing to pay a price premium for more recognizable products and services.

How should drivers balance risk management and affordability when it comes to car insurance?

It's widely accepted among consumers that market share is a key indicator of competitiveness. It follows that companies with a commanding market share are perceived as offering superior products or services. Consumers are willing to pay more for perceived value. With higher profits comes opportunities to further expand market share. As the cycle repeats, the connection between market share and perceived quality is reinforced.

Living in this digital revolution, is it necessary for companies, like insurance providers, to maintain localized agents and personalized experiences?

In our digital world, U.S. consumers spent a whopping $860 billion online in 2020. Is it still necessary for companies to offer personalized sales staff? On the one hand, consumers clearly value the safety, convenience, low prices and wide selection available online. This is particularly true when amounts being spent are well within one's discretionary budget. On the other hand, over half of online shoppers spend less than 15 seconds on a website. When purchases are for substantial amounts of money, selling requires much more engagement than a typical website can offer. Salespeople have the skills necessary to help would-be buyers with their purchase decisions.

Источник: https://www.valuepenguin.com/largest-auto-insurance-companies

Transitioning from an Intermediate Small Bank to a Large Bank Under the Community Reinvestment Act

By Rebecca Zirkle White, Senior Examiner, Federal Reserve Bank of Richmond

A bank’s transition under the Community Reinvestment Act (CRA) from an intermediate small bank (ISB) to a large bank may seem challenging at the onset because of differences between the large and ISB evaluation standards. For example, a large bank asian food san antonio begin collecting and reporting data for small business, small farm, and community development loans1 in the year in which it meets the CRA definition of large bank. The following year, it will be subject to the large bank CRA examination procedures, which include separate tests for lending, investments, and services. To help facilitate the transition, this article discusses ways for an ISB to anticipate the changes, develop an appropriate strategy, and enlist the aid of personnel across the institution to ensure a successful transition to the large bank examination procedures.

Transitioning to a Large Bank Under CRA

An institution is no longer considered an ISB when its assets equal or exceed the upper asset size threshold for small banks (which includes ISBs), as of December 31 for both of the prior two years.2 The small bank threshold equals $1.202 billion for 2014 and is adjusted annually.3

When an institution transitions from an ISB, it must immediately begin collecting loan data that will be reported in the following calendar year, consistent with standards provided for in Section 42 of Regulation BB and detailed later in this article. The institution will not be subject to the large bank examination procedures until one full calendar year after it ceased being an ISB (that is, until it has collected a full year of loan data subject to large bank CRA collection). Anticipating and understanding the requirements of a large bank before becoming one are critical to a successful transition.

Overview of the ISB Evaluation Process

Before discussing the standards for evaluating a large bank under CRA, it is helpful to review the ISB standards to highlight the differences. For an ISB, CRA performance is evaluated under the small bank lending and community development tests. The lending test evaluates the bank’s loan-to-deposit ratio, the percentage of lending in the bank’s assessment areas, the distribution of lending to borrowers with different incomes and revenues, and the distribution of loans in geographies of different income levels. See 12 C.F.R. §228.22(b). The streamlined lending test for small banks also considers an institution’s record of taking action in response to written complaints about its performance in helping to meet the credit needs in its assessment area(s). The community development test considers activities that meet the definition of community development as it is discussed in the next section of this article. In particular, the test considers the number and amount of community development loans and qualified investments,4 the extent of community development services, and the responsiveness through these activities to community development needs. Because both tests are weighted equally, a bank must receive at least a satisfactory rating for both the lending and community development tests to receive an overall satisfactory rating; a less than satisfactory rating for either test will result in an overall less than satisfactory CRA rating.

Community Development

Community Development is one aspect of the CRA examination that does not change when a bank becomes a large bank. Community development is defined in Regulation BB. See 12 C.F.R. §228.12(g). External Link Additional guidance is included in the Interagency Questions and Answers Regarding Community Reinvestment (Interagency Q&As).5 The term community development includes:

  • Affordable housing for low- and moderate-income (LMI) individuals
  • Community services targeted to LMI individuals
  • Activities that promote economic development by financing small businesses or small farms
  • Activities that revitalize or stabilize LMI geographies, designated disaster areas, and distressed or underserved nonmetropolitan middle-income geographies
  • Activities that support the Neighborhood Stabilization Program6

With limited exceptions, community development loans, qualified investments, and community development services that are considered as community development activities under an ISB CRA evaluation will continue to qualify under a large bank CRA evaluation with two key differences. First, large banks will not have the flexibility to have certain home mortgage, small business, or small farm loans that meet the regulatory definition of community development as community development loans.7 For large banks, these loans will be reported and will be considered under the retail portion of the lending test. Second, community development activities will be evaluated under different performance tests (the lending, investment, and service tests) instead of being evaluated together under one community development test.

Data Collection and Reporting for Large Banks

One significant new obligation for a bank transitioning from an ISB to a large bank is the requirement under 12 C.F.R. §228.42 to collect information about the small business, small farm, and community development loans it originates or purchases and to report this data annually to its CRA federal regulator. Anticipating the need to collect these loan data will help ensure a smooth transition, including establishing appropriate processes and systems to comply with this requirement. A recommended practice is to begin planning for data collection before the bank exceeds the small bank threshold on December 31 of the two consecutive years because the data collection requirement is effective when a bank crosses the large bank threshold. The Federal Finance Institutions Examination Council provides many resources, including instructional guides and free data entry software, to assist banks with data collection. These resources can be found at www.ffiec.gov. External Link

As detailed in the CRA regulation and guidance included in the Interagency Q&As, the collection of data for small business loans is limited to loans whose original amounts were $1 million or less and were reported as either “loans secured by nonfarm or nonresidential real estate” or “commercial and industrial loans” in Part I of the Report of Condition and Income (Call Report).8 A small farm loan must be reported if the original amount was for $500,000 or less, and if it was reported under either “loans to finance agricultural production and other loans to farmers” or “loans secured by farmland” in Part I of the Call Report.9 The annual revenue of a business or farm does not affect the small business or small farm classification.

As detailed in the table below, four key pieces of information must be collected for each individual small business or small farm loan.

  • A unique number or alphanumeric symbol to identify the relevant loan file
  • The loan amount at origination
  • The loan location (MSA or MD,10 state, county, and census tract)
  • An indicator whether the loan was to a business or farm with gross annual
  • revenues of $1 million or less11

Data must be reported in the aggregate. Specifically, for each geography in which the reporter originated or purchased a small business or small farm loan, the aggregate number and amount of loans in the following categories must be reported:

  • with an amount at origination of $100,000 or less;
  • with an amount at origination of more than $100,000 but less than or equal to $250,000;
  • with an amount at origination of more than $250,000; and
  • to businesses and farms with gross annual revenues of $1 million or less (using the revenues that the bank considered in making its credit decision).

Data collection is one of the key actions a bank must take during the one-year lag period before it is subject to the large bank examination procedures. When the CRA data are collected for any year, the aggregated CRA data must be reported in the required format by March 1 of the following year.12 Examination staff will use small business and small farm loan data when evaluating a bank’s performance under the lending test.

In addition to reporting small business and farm loans, large banks must report community development loans. However, this data reporting is more limited because only the aggregate number and aggregate amount of community development loans originated or purchased during the prior year are reported.13 A bank that elects to have its CRA examiners consider community development loans by a consortium or third party must report the data the bank would have reported had the loans been originated or purchased by the bank.

If a large bank is subject to the Home Mortgage Disclosure Act (HMDA) reporting rules, it must report additional mortgage data for CRA purposes. Specifically, the location of each home mortgage loan application, origination, or purchase outside the MSAs in which the bank has a home or branch office (or outside any MSA) must also be reported in accordance with the regulatory requirements. This information must be included in the loan application register. See C.F.R. §1003.4(e).

Furthermore, a large bank has the option to collect and maintain (but not report) consumer loan data for consumer loans originated or purchased during a calendar year. Categories of consumer loans for which a bank may collect data include motor vehicle, credit card, home equity (if not reported under the HMDA), other secured, and unsecured.14 Banks may collect information for one or more of the categories, but if a bank chooses to collect data for loans in a certain category, it must collect data for all loans originated or purchased in that category. The consumer loan data to be collected, if a bank chooses to do so, mirrors the data requirements for small business and small farm loan collection: a unique identifier for each loan, loan amount at origination or purchase, loan location, and gross annual income of the consumer that the bank considered in making its credit decision. These data should be provided to examination staff for consideration in the bank’s CRA evaluation.

Section 228.22(c) additionally provides that, at a bank’s option, loans by an affiliate of the bank will be considered if the bank provides data on the affiliate’s loans pursuant to §228.42. A bank that elects to have loans by an affiliate considered shall collect, maintain, and report for those loans the data that the bank would have collected, maintained, and reported had the loans been originated or purchased by the bank. For home mortgage loans, the bank shall also be prepared to identify the home mortgage loans reported under Regulation C by the affiliate.

In particular, CRA Q&A ___.22(c)(2)(i)—1PDFExternal Link provides that an institution may elect to have loans by its affiliate(s) considered. The bank may elect to have all or only certain categories of the following types of loans considered: home mortgage loans, small business loans, small farm loans, community development loans, and the five categories of consumer loans mentioned previously.

Further, Q&A ___.22(c)(2)(i)—1PDFExternal Link explains rules that prohibit an affiliate from claiming a loan origination or loan purchase when another institution claims the same loan origination or purchase. Additionally, Q&A ___.22(c)(2)(ii)—1 prohibits “cherrypicking” within any particular category of loans by providing that when an institution elects to have considered loans within a particular lending category made by one or more of the institution’s affiliates in a particular assessment area, all loans made by all of the institution’s affiliates within that lending category in that particular assessment area must be considered.

Large Bank Evaluations

The large bank CRA performance standards include three tests, lending, investment, and service, which are discussed in greater detail below. Unlike the ISB evaluation method, in which the lending and community development tests are weighted equally in determining the institution’s overall CRA rating, the large bank lending test receives greater weight than either the investment or service tests in determining the overall rating. The investment and service tests are weighted equally. The table below shows the weight assigned for each rating under each test.

Component Test Ratings

Points for Lending

Points for Investment

Points for Service

Outstanding

12

6

6

High Satisfactory

9

4

4

Low Satisfactory

6

3

3

Needs to Improve

3

1

1

Substantial Noncompliance

0

0

0

An institution rated outstanding for the lending test will receive an overall rating of at least satisfactory.15 Alternatively, an institution that receives a rating of less than satisfactory for the lending test will receive an overall rating of less than satisfactory16 regardless of the ratings of the investment and service tests.

The following table illustrates how the sum of the component test rating scores translates to the assignment of the overall CRA rating.

Composite Rating

Points Needed

Outstanding

20 or more

Satisfactory

11 through 19

Needs to Improve

5 through 10

Substantial Noncompliance

0 through 4

Lending Test

The lending test components for a large bank CRA evaluation differ from those for an ISB evaluation. For a large bank, two ISB lending test factors are eliminated: the loan-to-deposit ratio and the institution’s responsiveness to written complaints about its performance in meeting the credit needs in its assessment area(s). Conversely, two new elements are introduced for the large bank lending test:

  • Lending Activity — lending activity considers a bank’s responsiveness to credit needs in its assessment area(s), taking into account the number and amount of home mortgage, small business, small farm, and consumer loans, if applicable, in its assessment area(s).
  • Innovative and Flexible Lending Practices — a bank’s use of innovative and flexible lending practices in a safe and sound manner to address the credit needs of LMI individuals or geographies is a qualitative consideration when assessing the success and effectiveness of the bank’s lending.17

However, the most significant difference between the ISB lending test and the large bank lending test involves community development lending. The first change involves qualitative considerations when evaluating community development loans. While the regulatory definition of community development is unchanged, community development loans are no longer grouped with investments and services under a broad community development test but are considered as a component under the large bank lending test. Community development loans are evaluated based upon the number and dollar amount of such loans as well as their complexity and innovativeness. These last two criteria add additional qualitative dimensions to the evaluation of a large bank’s performance and may augment performance under the quantitative criteria of the lending test.18

Another significant difference involving community development loans is the removal of the ISB option to treat certain small business, small farm, or mortgage loans as community development loans. As previously discussed, when an ISB does not report mortgage, small business, or small farm loan data, it can choose, on an individual loan basis, to have any of these types of loans that meet the definition of community development treated as community development loans. Upon this election, these loans are considered under the community development test and cannot also be considered under the ISB lending test.

This option is not available to large banks, even when the large bank does not report mortgage loan data. With one exception, loans that would need to be reported under Regulation C, if the large bank were required to collect and report such loans, cannot be treated as community development loans. The only exception is for multifamily housing loans that have a community development purpose. Whether reported or not, such a loan can be considered both a community development loan and a mortgage loan under the large bank lending test. Since large banks must report community development loans, it is critical that such loans be identified both to meet this technical reporting requirement and to ensure such loans are properly evaluated as part of the lending test.

Successfully identifying community development loans will typically require the involvement of loan officers or loan administration personnel because these staff members are often in the best position to identify when a loan meets the definition of community development. Staff training, checklists to establish when loans have a community development purpose, and strong collaboration between lending staff and bank staff responsible for reporting community development loans can help to ensure such loans are properly identified and reported.

The remaining elements of the lending test for a large bank evaluation are unchanged from the ISB evaluation process and focus on an analysis of the bank’s major loan products. Loans reviewed will include small business, small farm, and loans reported under the HMDA although, based upon a bank’s distinctive lending profile, other types of loans may be reviewed. Assessment area concentration measures the proportion of loans originated inside the bank’s delineated assessment area(s). Additionally, within the bank’s assessment area(s), the geographic distribution of lending in geographies of different income levels and the distribution of lending to borrowers with different incomes or revenues continue to be considered under a large bank CRA evaluation. The table below summarizes the lending test similarities and differences for large banks and ISBs.

Lending Test Component

Large Bank Lending Test19

ISB Lending Test20

Loan-to-Deposit Ratio

No

Yes

Lending Activity

Yes

No

Assessment Area Concentration

Yes

Yes

Geographic Distribution of Loans

Yes

Yes

Lending Distribution Based upon Borrower Characteristics (Income or Revenue)

Yes

Yes

Community Development Lending

Yes

No — but included in Community Development Test

Innovative or Flexible Lending Practices

Yes

No

Response to Written Complaints About Performance in Meeting the Credit Needs of Assessment Area(s)

No

Yes

Investment Test

The investment test can present challenges for an ISB transitioning to large bank status. Interagency Q&A ___.26(c)—1PDFExternal Link explains that an ISB has the flexibility to allocate its resources among community development loans, qualified investments, and community development services in amounts that it reasonably determines are most responsive to community development needs and opportunities.

Large banks are evaluated under separate lending, investment, and service tests, which include expectations for community activities under each test. It is important for a large institution, or an institution that is approaching large bank status, to recognize the increased regulatory expectations and to plan accordingly. A bank that has not planned properly may discover too late that its level of participation in qualified community development investments is insufficient to achieve a satisfactory rating under the investment test.

Qualified investments must benefit one or more of a bank’s assessment areas or a broader statewide or regional area that includes the bank’s assessment area(s).21 Factors considered under the large bank investment test include:

  • dollar amount of community development investments including grants;
  • complexity and innovativeness of qualified investments;
  • responsiveness of qualified investments to area needs; and
  • degree to which qualified investments are not routinely provided by private investors.

All of these elements are considered when reviewing performance. Complexity, innovativeness, and the degree to which qualified investments are not routinely provided by private investors are all factors under the large bank investment test that are not included in the ISB community development test. These specific criteria permit an examiner to qualitatively weight certain investments differently or to make other appropriate distinctions when evaluating an institution’s record of making qualified investments. Banks should consider both quantitative and qualitative factors, in the context of safety and soundness, when weighing their investment choices. Ultimately, the investment test rating measures an institution’s responsiveness to community needs relative to available opportunities.22

Many institutions find that assistance from the chief financial officer or investment officer is critical to identify qualified investments or investment opportunities. Beyond the purchase of a qualified investment, documentation of the community development benefits of the investment is important. Documenting the purpose of the investment, through the prospectus or other relevant documents, the geographic area benefiting from the investment, and any qualitative elements will help both bank staff monitoring CRA performance and examination staff conducting the CRA evaluation.

Service Test

The service test for large banks generally does not present transition issues. It has two components: retail services and community development services. While an ISB evaluation considers community development services, the retail services component is specific to the large bank CRA examination process and focuses on the location of branch offices and their operations. The distribution and accessibility of branch offices to LMI areas and persons are considered along with the opening or closing of any branch locations, particularly in LMI geographies. Alternative delivery methods, including ATMs and mobile banking, are also considered. Finally, the range of services provided in geographies with different income levels and the degree to which the services are tailored to meet local needs are part of the performance evaluation.23

Under the community development services component of the large bank service test, CRA consideration is given to services with a community development purpose that are related to the “provision of financial services.”24 Both requirements must be satisfied. In general, activities that use employees’ financial expertise as related to banking meet the definition of a community development service.25 Activities may result from serving on the board of directors of a community development organization or by providing financial expertise through volunteer activities. Qualified community development services are reviewed for the extent to which community development services are provided and the innovativeness and responsiveness of the services to area needs.26

Identifying and documenting qualified services may be best accomplished through a bankwide effort that engages staff across the organization. Some institutions have had success capturing community development services through the use of an internal form to document qualified activities. The form may be structured as a survey completed by staff members. The forms are periodically submitted to or aggregated by the CRA officer or other responsible staff to verify that the activities submitted qualify. An effective process will identify the nature of the service provided, any partner organizations involved, targeted beneficiaries of the service, and dates.

Conclusion

With a clear strategy and proper preparation, banks transitioning from ISB performance standards to large bank performance standards can successfully navigate the differences between the two CRA evaluation methods. Enlisting the aid of bank personnel across different departments, including lending, finance, and retail administration, can facilitate the transition process, and engaging such staff on an ongoing basis can help sustain success.

Specific issues and questions should be raised with your primary regulator.

Источник: https://consumercomplianceoutlook.org/2014/fourth-quarter/transitioning-from-intermediate-small-bank-to-large-bank-under-cra/

Understanding vertical and horizontal compliance processes: A means to increased quality and reduced costs

Written by Joseph Wiest

compliance2

INTRODUCTION
Companies in the United States employ many processes in running their businesses.  Laws from various sources affect these processes, so that the processes and administration of them are specialized.  When company management does not acknowledge the need for common understanding and for specialization, the results are confusion, subsequent errors, and increased costs.

Being aware of the need for specialization assists in “knowing how to use and respond to language appropriately, given the setting, the topic, and the relationships among the people communicating.”[1]  Two specialists who are fluent in using and responding to the language of their specialty will comprehend each other.  The conversation between a specialist and a non-specialist may be fluent, but unless both parties use the language appropriately, they will not comprehend each other while two non-specialists conversing about a specialty may unknowingly lack both fluency and comprehension.

In regards to “compliance”, the word can be used to mean anything to do with laws, working with regulators, or even auditing.  To assure fluency and comprehension, “compliance” is used to mean abiding with the requirements of “laws”, i.e., constitutions, laws, statutes, regulations, court rulings, etc., promulgated by a governmental body with appropriate jurisdictional authority.

For property and casualty insurance companies[2], there are five major categories of laws to comply with:

  1. Federal economic sanctions
  2. Money, or financial matters
  3. Employees, or human resources issues
  4. The business of insurance, or operations
  5. Activities that support insurance operations

A discussion of compliance with federal economic sanctions and notable laws specific to insurance follows.  (The Appendix has a listing of laws that generally apply to financial, human resources, and business activities of all industries.)

FEDERAL ECONOMIC SANCTIONS COMPLIANCE
Federal economic sanctions apply to all United States citizens and businesses, arching over other compliance requirements.  The regulations enforced by the United States Treasury’s Office of Foreign Assets Control (OFAC) prohibit insurers from “engaging in [financial] transactions not licensed by OFAC that in any way involve”[3] individuals named on federal terrorist or narcotics trafficker lists or in certain countries[4] unless OFAC has pre-approved the transaction by issuance of a license.  This applies to insurance companies, brokers, business partners, and employees, and includes transactions such as collecting premium to issue a policy[5],[6] and paying a claim[7],[8].  Although OFAC has published risk matrices as guidance for financial services, charities, and securities firms to assess their risks in relation to compliance with the economic sanctions administered by OFAC,[9] no risk matrix has been published for the insurance industry.[10]

The next category of laws deals with financial issues affecting property and casualty insurance companies.  These laws are typically administered by a corporate finance department.

INSURANCE FINANCE COMPLIANCE
Insurance companies are expected to comply with laws addressing these financial matters.

  • Company Formation and Capitalization
  • Domiciliary jurisdiction – compliance with the business laws of the jurisdiction where the company is domiciled, filings with Secretary of State and capitalization requirements of insurance regulatory authority.
  • National Association of Insurance Commissioner’s (NAIC) Uniform Certificate of Authority Application (UCAA) – required filing of financial documents with a state’s insurance regulator to obtain a certificate of authority to sell insurance in a state.
  • SAP (Statutory Accounting Principles)
  • Solvency
  • Reinsurance
  • Guaranty Funds
  • Internal controls over financial reporting, including revisions to the Annual Financial Reporting Model Regulation (the Model Audit Rule)[11]
  • Reinsurance
  • Guaranty Funds
  • Premium Taxes (state, county, municipality)
  • Producer commission payments
  • Environmental Compliance – Insurers with direct written premium over $300 million must complete the Insurer Climate Risk Disclosure Survey to provide regulators and insurance consumers a method to “assess insurers’ risk assessment and management efforts” regarding climate change risks, focusing on insurer solvency and insurance availability and affordability.[12]  Twenty-one states require insurers to complete the survey.[13]

The next category addressed is compliance with laws regarding employers and employees.  These laws are typically administered by a staffing or human resources department.

INSURANCE HUMAN RESOURCES (HR) COMPLIANCE
Most of the laws that address how companies and employees interact apply to all industries.  There is a short list of laws that specifically apply to insurance companies.

  • Payroll Administration (requires interaction with Finance)
  • Commission payments – to company employees who are licensed and paid as producers
  • Violent Crime Control and Enforcement Act of 1994 (18 USC §§ 1033-34)

The discussion continues with a focus on compliance with laws specifically addressing the business of insurance.

INSURANCE OPERATIONS COMPLIANCE
Some laws, especially at the state level, affect only the business of insurance (operations) or only a specific type of insurance, such as auto or homeowners.  The major topics are:

  • Advertising/Marketing (Sales and Service)
  • Unfair Trade Practices Acts
  • Producer advertising materials
  • Risk Selection (Underwriting)
  • Declination
  • Rescission
  • Terminations
  • Initial Underwriting Period
  • Midterm Cancellation
  • Nonrenewal
  • Partial (policy modification to remove a coverage or impose a higher deductible)
  • Consumer Reports Used by Insurers
  • FCRA (Fair Credit Reporting Act, as amended by the FACT Act of 2003)
    • Permissible use
    •  Disposal
    •  Adverse use
  • Various laws restricting or prohibiting the use of credit information, including “freezes”
  • Acquisition and Retention (Sales and Service)
  • Assigned Risk (automobile) and Residual Markets (property Market Assistance Plan https://usacreditunion.us/map1.php, Fair Access to Insurance Requirements [FAIR] program, and Wind, Beach and Coastal Plans)
  • Rating – charging the same rate for the same risk, prohibited rating factors
  • Accounts Receivable (Customer Accounting)
  • Billing
  • Payment Posting
  • Refunds
  • Unfair Claims Practices Acts
  • Adjuster Licensing
  • Continuing Education
  • Notice to insurance regulators following “for cause” termination
  • Privacy – affects all operations processes (Most notably, state insurance privacy laws passed in response to the federal Gramm-Leach Bliley Act and the NAIC Model Insurance Information and Privacy Protection Act)
  • Notice of Information Practices
  • Opt Out provisions
  • Use and display of customers’ Social Security Numbers
  • Ensuring information collected from customers is secure from unauthorized access
  • Notifying customers in the event of a breach of security
  • Business Continuation/Disaster Recovery

These laws affect the major processes of insurance operations, which are:

  • Underwriting – risk acceptability selection and routine monitoring for continued acceptability
  • Sales and Service – acquisition of new business and retention of insureds
  • Billing – customer accounting or accounts receivable
  • Claims handling – settling claims based upon contractual language and facts of the loss

OPERATIONS SUPPORT PROCESSES
To support the major processes of insurance operations, insurers engage in at least six additional distinct processes.  None of these involve routine customer contact except complaint administration.

  1. A company is responsible to validate licenses and continuing education, to appoint, and to notify states when appointments are terminated for employees who are producers and adjusters.
  2. For companies that use agents or brokers to sell and service its insurance products, the insurer needs to administer contracts, commission payments, and business relationships with the agents and brokers.
  3. Product development and management works closely with actuarial services and with regulatory filings and handles:
  • The development of new policies, coverages, and endorsements and the maintenance of existing products
  • Ensuring that wording used by contracts, forms, endorsements, and general correspondence for use with customers meets all legal and business requirements
  • Production and maintenance of rate and form manuals for the use of employees who deal with customers
  • Release of new or revised rates, forms, etc., into production after all necessary filings have been approved

Companies sometimes establish one business area for the development of new products and another for the maintenance of existing products.

  1. Actuarial services supports product management by developing adequate and competitive rates for underwriting risks accepted by the company.  A company’s claims department relies on actuaries to develop loss reserves for probable future liabilities related to unpaid and incurred but not reported claims.
  2. Various laws require companies to file rates, forms, manuals, or data in response to new laws or changes in laws, when the company initiates changes to its products, or at the request of an insurance regulator.  The regulatory filings department administers this process. Filings must be made in specific formats and provide details about issues such as the purpose of the filing, premium affects upon insureds, and an actuarial memorandum that supports any rate changes.  Filing of data to fulfill regulator requests requires validation of the data accuracy to ensure the regulator is provided with reliable information. Various regulatory agencies at both the state- and federal-level require insurers to file periodic routine reports, such as a state law requiring insurers to notify the state department of transportation of vehicles no longer insured by the company or federal law requiring liability, no-fault, and workers’ compensation insurers to report payments made to Medicare beneficiaries to the Centers for Medicare and Medicaid Services (an agency of the Health and Human Services Department).[14]  Many states also require ad hoc reports, such as monthly updates regarding the numbers of claims presented and closed after a catastrophe.
  1. Consumer protection laws require companies to respond to and keep record of complaints.  Regulators thoroughly review complaint-tracking reports and/or directly review complaints when conducting market analysis and during market conduct examinations.

The next section addresses how a property and casualty insurer coordinates compliance with all of these laws by the establishment of various processes.

THE PROCESSES OF A PROPERTY AND CASUALTY INSURANCE COMPANY

VERTICAL PROCESSES. Project management refers to a process that drives the flow of knowledge as a “vertical process.”[15]  All of the insurance processes discussed above are vertical processes.  How they fit together is demonstrated in Table 1.

table1

Table 1 – Vertical Processes – Insurance Company

The laws affecting finance and HR issues to a large extent determine the processes within a company’s finance and HR departments.  Accordingly, the compliance process is often integrated within the finance and HR processes.  The finance and HR processes generally do not involve contact with customers.

Insurance operation processes provide service to insurance customers by directly interacting with customers.  The compliance process is either integrated in each of the operations and operations support processes or it may be centralized within a compliance department.  If centralized, the employees supporting the operations and operations support processes are able to fully focus on and maximize their skills directly related to their respective specialties.

INTEGRATED VERTICAL AND HORIZONTAL PROCESSES. Horizontal processes drive the flow of work[16] and integrate vertical processes into a coherent system.  Table 2 illustrates how an insurance company’s vertical and horizontal processes may be integrated and also displays the points of interaction between insurers and governmental authorities.  As was done with vertical processes, the discussion is limited to compliance with laws specific to insurance companies.  (The Appendix provides a discussion of the horizontal processes which are not specifically addressed by insurance laws.)

table2

Table 2 – General Business and Insurance Business Processes

A corporation’s entity type and method of capitalization form the foundation of its processes.  The requirements for an insurance company vary based on state insurance laws regarding formation as a stock company, mutual, reciprocal, etc., and whether capital funding is private or public.  State insurance laws require that insurance companies have a board of directors and company officers.  Company officers are responsible to develop and maintain business practices and procedures appropriate for the business.

To comply with new or changes to existing laws, an insurance company may need to alter its operations or operations support processes or periodically introduce new horizontal processes, such as privacy and security.  In addition, training and procedures may need to be changed.  Many states require insurance companies to develop plans for minimal disruption of service to its insureds in the event of a disaster.  Disaster recovery laws are an example of an insurance law that applies not only to the operations processes but financial and HR processes as well.  State insurance laws require companies to submit to regulatory examinations, with authority to require internal audits, and to participate in administrative hearings and arbitration.

How these vertical and horizontal processes interact is discussed next.

INTERACTION OF AN INSURANCE COMPANY’S PROCESSES

PARALLEL HORIZONTAL PROCESSES. The four major vertical processes of an insurance company – finance, human resources, operations, and operations support – are demonstrably different from each other, based distinctly upon the laws being complied with, the customers being supported, the different skills and aptitudes of employees, and the specialized professional certifications available to employees.  However, recognizing horizontal processes as separate and distinct may not be as evident.

For example, although compliance and auditing are parallel processes, and there are laws requiring a company to conduct audits, the two processes are distinct.  The compliance process focuses on the implementation of requirements from laws within the appropriate process or processes, while auditing focuses on the validation that these requirements were implemented properly, completely, and timely.  Therefore, a compliance process reacts to new laws and proactively drives changes to the company’s other processes to assure there are no gaps in compliance.  Conversely, auditing is a post-implementation process that proactively assesses the quality of the process being audited by validating whether processes are performing as expected and is reactive when non-compliance issues are uncovered.  Only when those conducting an audit are not the same persons who assisted in the development of compliant processes are the audit results are objective and independently verifiable.[17]

Another example of parallel horizontal processes is compliance (with laws) and adherence (to contracts and policies).  Governmental authorities establish laws and expect businesses to comply with those laws.  A company signing a contract with another company expects the other company to fulfill its contractual obligations by complying with the terms of the contact.  A company establishes its own policies and expects its employees to follow those policies consistently.  It is expected that laws will be complied with and contracts and policies adhered to.  With only the authority behind the requirements being different, the compliance and central bank near me contact number processes are similar; however, even so, the scope of a compliance process is properly limited to requirements from laws.

INTERSECTING PROCESSES. To ensure the roles of a horizontal and vertical process that intersect remain separate, the interaction should be limited to the intersection point of the two processes.  When the interaction is not limited, those outside of the intersecting processes many times see the roles of the intersecting processes as similar and indistinct.  These examples will demonstrate the importance of establishing and maintaining separate roles for distinct processes.

Upon the identification of changes because of a new law or an amendment to an existing law, a compliance department is responsible to communicate those changes to the affected operations area.  A compliance department would notify the claims department of a new law that affects claims handling.  The claims department would then alter its processes as needed to comply.  In so doing, the two departments focus on their respective specialties – compliance and claims – and the compliance department would not start performing work that properly belongs to the claims department.

In regards to customer complaints, the role of the compliance department is to identify new laws or changes to laws addressing complaint handling and ensure that a compliant process for responding to complaints is in place.  Usually, either an operations support area or the operations area to which the complaint is addressed will respond to the complainant.  A compliance department would not have line authority over operations staff and would not be able to administer corrective or disciplinary action to the employees whose actions have caused the complaint.  Accordingly, the compliance department should not have responsibility for vertical processes such as responding to customer complaints.

Separate administration of all distinct processes focuses and limits the scope of responsibilities of all processes.  When distinct processes are combined, the distinctiveness of each becomes blurred, from the perspective of those familiar and those unfamiliar with the processes.  Blurred processes become inefficient and ultimately ineffective.  The result of maintaining distinct processes as separate processes is the maximization of efficiencies and effectiveness.

Specialized skills, knowledge, aptitude, and, in some cases, a professional license or designation are needed required to effectively handle the flow of knowledge within the finance, HR, operations, and operations support activities.  The availability of a professional certification or designation may be used as a straightforward method of distinguishing among processes.  If a certification or designation is available for a specialized function, then that function and the process supported by it are distinct from other specialized functions and warrants administration as a separate process.

ADMINISTRATION OF THE COMPLIANCE PROCESS
Insurance companies have several options when determining which of the company’s departments will administer compliance.  Many workable arrangements are possible that account for the complexities of general and insurance business laws, the multiple processes of any company, and the unique characteristics of individual companies.  The structure below is an example that shows compliance both as a separate process and systemically embedded.  In any configuration, hiring staff with the appropriate professional designations merits strong consideration.

  1. Dedicated staff supporting the specialized processes of finance, HR issues, and operations support are responsible for all of the compliance responsibilities associated with their specialized processes.
  2. An operations compliance manager supports all operations processes by identifying new compliance requirements for these operations.  In this arrangement, the operations functions each concentrate fully on their core processes.
  3. A corporate compliance department supports the business having:
    1. Oversight of the compliance process for the entire company.  To accomplish this, corporate compliance has authority with respect to compliance matters over the vertical processes of finance, HR, and operations, and operations support.
    2. Conducting the compliance process for laws that affect more than one horizontal process.  This will ensure that the integration of these laws throughout all processes is generally consistent.
  4. Both the corporate compliance and auditing functions report to the Audit Committee of the Board of Directors.  This will ensure board awareness and involvement in the separate parallel processes of compliance and auditing.
  5. The internal audit department, in addition to conducting audits to validate compliance, also audits for adherence to corporate policy. Additionally, based on the similar roles in post-compliance validation of audit and regulatory examinations, the internal audit department also supports regulatory examinations of the operations and operations support processes.  The company that has only one source that drive changes required due to regulatory examinations and internal audits.

This configuration covers the height and breadth of compliance for insurance companies; including horizontal processes such as corporate policies and auditing, and vertical processes of finance, HR, and operations.  The implementation of such an arrangement is one way to ensure that the company’s compliance process is holistic and systemic, which fosters fluency and comprehension between a company’s departments.  With strong reporting relationships in place, the company’s board of directors is assured that the board’s corporate governance responsibilities regarding compliance are fulfilled.

SUMMARY
Every business is obligated to comply with a variety of laws from state and federal legislatures, regulatory agencies, and courts.  Although states are the primary regulators of the business of insurance, some federal laws also affect the insurance industry, either directly or indirectly.  Laws that affect insurers can be general, specific to an activity, or specific to certain types of insurance policies.  To comply with changes to existing laws or new laws, companies must first be aware of the laws, regardless of the source, and then react to the laws.  The processes companies follow in reaction to changes to laws are part of a compliance process, which proactively makes changes to business processes for the company to remain compliant.

All processes can be categorized as either vertical or horizontal.  A vertical process drives the flow of knowledge while a horizontal process drives the flow of work.  Horizontal processes are necessary to link all vertical processes into a coherent system.  The effectiveness and efficiency of these links determines the effectiveness and efficiency of the business.  The availability of a certification or designation for a specialized function is a sound indication that a vertical or horizontal process is distinct from other processes and should be maintained and administered as a separate process.

In the insurance industry, companies have many choices in determining the best method of administering the compliance process.  A compliance process is often integrated within the finance, HR, and the various operations support processes.  Operations processes may also have integrated compliance or a centralized compliance process may support operations.  Each company’s compliance process should recognize both the company’s unique characteristics as well as the need the unique aspects of specialization within laws and the efforts taken to comply with specialized laws.  When done, this ensures that the company specialists are fluent in and comprehend both the legal requirements and the company’s processes, resulting in harmony instead of confusion, fewer errors and cost savings.  In turn, this provides assurance to the company’s directors that its corporate governance responsibilities regarding compliance are fulfilled.

APPENDIX


A.  VERTICAL PROCESSES – GENERAL BUSINESS COMPLIANCE ISSUES

1.  Finance Compliance[18]

  • Treasury Management[19]
  • Borrowing
  • Leasing
  • Investor relations
  • Collection
  • Disbursements
  • Short-term investing
  • Long term securities and equities
  • Risk Management
  • Employee Benefit Fund Management
  • SEC Oversight (limited to publicly traded companies) through the Securities Exchange Act
  • Financial reporting
  • Internal Accounting
  • GAAP (Generally Accepted Accounting Principles)
  • Auditing
    • Sarbanes-Oxley Act of 2002 (some provisions apply to both public and private companies)
    • Public Company Accounting Oversight Board (PCAOB) – auditing standards
    • USA PATRIOT Act
  • Tax reporting and tax filings (federal, state, local)
  • Bank relationship management
  • Payables – payroll (requires interaction with Human Resources), accounts payable
  • Budget and Financial Planning
  • Management Information Systems
  • Credit and Accounts Receivable
  • Electronic Funds Transfers
    • ACH (Automated Clearing House) Coding
  • External Auditor Relations

2.  HR Compliance[20]

  • FCRA (Fair Credit Reporting Act, as amended by the FACT Act of 2003)
  • Permissible use
  • Disposal
  • Adverse use
  • Discrimination Protections
  • ADA (Americans with Disabilities Act) and ADA Amendments Act of 2008
  • ADEA (Age Discrimination in Employment Act of 1967)
  •  Civil Rights Act of 1964
  •  Civil Rights Act of 1991
  • Equal Employment Opportunity Act
  • EEOC’s E-RACE Program (Eradicating Racism And Colorism from Employment)
  • Discrimination protections in connection with background checks
  • The Employee Polygraph Protection Act of 1988 – employers may not request or require applicants or discipline employees for declining to take a polygraph test
  • Family and Medical Leave Act
  • Genetic Information Nondiscrimination Act of 2008
  • OWBPA (Older Workers Benefit Protection Act)
  • Immigration Reform and Control Act of 1986 – employers may not discriminate against individuals based on national origin or citizenship
  • Sarbanes-Oxley Act of 2002, Whistleblower Protection
  • The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) – provides re-employment rights to military personnel and prohibits discrimination by employers
  • Health Benefits/Retirement
  • ERISA (The Employee Retirement Income Security Act of 1974)
  • Family and Medical Leave Act
  • Payroll Administration (requires interaction with Finance)
  • Internal Revenue Act
  • FLSA (Fair Labor Standards Act)
  • Tax reporting
  • Workplace Safety/Workplace Injuries
  • OSHA (Occupational Safety & Health Administration)
  • Workers’ Compensation Insurance
  • Release of Employees – Mass Layoff
  • Worker Adjustment and Retraining Notification (WARN) Act
  • Immigration Reform and Control Act of 1986 – only persons who are able to prove they are authorized to work in the United States may be hired by an employer

3.  General Business Compliance Issues

  • Telemarketing Sales Rules (”Do Not Call”) issued by the Federal Trade Commission or similar rules issued by a comparable state agency to protect the public from unwanted telemarketing
  • Patent, Copyright, Trademark, Servicemark, Patent and Trade Secret protections
  • Obtaining, Using, and Protecting Information
  • Gramm-Leach-Bliley Act
  • HIPAA (Health Insurance Portability and Accountability Act of 1996)
  • Products/Services Sold to Members of the U.S. Military
  • SCRA (The Servicemembers Civil Relief Act of 2003) and related state laws
  • Conducting Business Electronically
  • UETA (Uniform Electronic Transactions Act)
  • E-Sign (Electronic Signatures in Global and National Commerce)
  • Document Retention (Sarbanes-Oxley Act of 2002)

B.  HORIZONTAL PROCESSES – GENERAL BUSINESS COMPLIANCE ISSUES

1.  Corporate Governance Issues

The Sarbanes-Oxley Act requires publicly traded companies to have a corporate governance plan.  The New York Stock Movie times fort smith ar malco requires every company listed by the Exchange to have “certain standards regarding corporate governance,” regarding “corporate responsibility, integrity and accountability to shareholders.”[21]  Companies not listed by the Exchange may opt to develop corporate governance policies based on the Exchange’s standards to be modernistic, before going public, or because a lender requires it.

2.  Establishment of Various Corporate Policies and Departments

A board establishes an ethics policy to provide general oversight and direction for corporate behavior.  Corporate counsel serves as consultants for the company’s board and management with the development of corporate policies.  In addition to supporting policy formation, corporate counsel should be involved in nearly every aspect of the company’s processes, particularly all issues regarding laws and contracts.  Risk management is sometimes set up as a separate department with responsibility to identify and reduce state farm bank compliance test answers to all types of risks to the company.  A corporate compliance department may be established and have responsibility to administer the overall compliance process.  Counsel’s legal interpretation of risks and laws is supportive of the risk management and compliance processes.

A company’s ethics policy, or code of business conduct, often states that the company will comply with all known laws.  (The three largest P&C insurers in the United States from the 2011 Fortune 500 list[22] make a similar statement,[23] and others very likely do as well.)

Many companies form departments to administer contracts the company signs.  In support of risk management, the contract department should validate that all employees adhere to corporate policies in areas such as contractual data-sharing agreements.  A corporate training department may be formed.  Policies to address the topics of security of its employees, customers, premises, systems, and intellectual property may be established.  A corporate audit or internal audit department would be formed in part to validate that the company’s various processes are compliant with laws and adhere to corporate policies.  The company would also establish departments for computer processing and advertising and marketing.

REFERENCES


American International Group, “Code of Conduct” [http://www.aigcorporate.com/corpgovernance/Code_of_Conduct2010/AIGCodeOfConductEng.pdf].

Berkshire Hathaway Group, “Berkshire Hathaway Inc. – Code of Business Conduct and Ethics.”  [http://www.berkshirehathaway.com/govern/ethics.pdf].

CNN/Money Homepage, Fortune Magazine, “Fortune 500 2011” Rankings by “Industry: Insurance: P & C (stock)”, [http://money.cnn.com/magazines/fortune/fortune500/2011/industries/182/index.html] and (mutual) [http://money.cnn.com/magazines/fortune/fortune500/2011/industries/184/index.html].

Cornell University Law School, LII/Legal Information Institute, “UCC:  uniform commercial code”, [http://www.law.cornell.edu/ucc/1/].

Corporate Legal Times, “The Roundtable Sponsored by Littler Mendelson:  Compliance Matters – What Should You Be Doing to Build Better Compliance Policies?”,  September 2005:1,  [http://www.insidecounsel.com/pdfs/SeptRoundtable.pdf]

Department of Health and Human Services, “Mandatory Insurer Reporting:  Liability Insurance, Self-Insurance, No-Fault Insurance and Workers Compensation”, [http://www.cms.hhs.gov/MandatoryInsRep/03_Liability_Self_No_Fault_Insurance_and_Workers_Compensation.asp#TopOfPage].

The Institute of Internal Auditors, “International Standards for the Professional Practice of Internal Auditing”, [http://www.theiia.org/guidance/standards-and-guidance/ippf/standards/full-standards].

National Association of Insurance Commissioners, NAIC/AICPA Working Group, Financial Condition (E) Committee, “Model Audit Rule Revisions”, [http://www.naic.org/committees_e_naic_aicpa_wg.htm].

National Association of Insurance Commissioners, News Release “Insurance Regulators Adopt Climate Change Risk Disclosure”, [http://www.naic.org/Releases/2009_docs/climate_change_risk_disclosure_adopted.htm].

National Association of Insurance Commissioners, “Climate Change and Global Warming (EX) Task Force 2010 Fall National Meeting, Sunday, October 17, 2010, 5:00 – 6:00 p.m. Handout”.  [http://www.naic.org/documents/committees_ex_climate_101017_handout.pdf]

National Capital Language Resource Center (NCLRC).  “The Essentials of Language Teaching, Goal:  Communicative Competence”,  [http://www.nclrc.org/essentials/goalsmethods/goal.htm].

New York State Insurance Department, “Circular Letter No. 11 (2009),” “Compliance with the Federal Bank Secrecy Act, Foreign Corrupt Practices Act, and Office of Foreign Assets Control Requirements”, [http://www.ins.state.ny.us/circltr/2009/cl2009_11.htm].

New York Stock Exchange, “Final NYSE Corporate Governance Rules”, [http://www.nyse.com/pdfs/finalcorpgovrules.pdf].

New York Stock Exchange, “Listed Company Manual”, Section 301.00 Introduction, [http://www.nyse.com/Frameset.html?displayPage=/listed/1022221393251.html].

Securities and Exchange Commission.  Final Rule:  Revision of the Commission’s Auditor Independence Requirements, [http://www.sec.gov/rules/final/33-7919.htm].

Snider, Keith F., and Nissen, Mark E., “Beyond the Body of Knowledge:  A Knowledge-Flow Approach to Project Management Theory and Practice”, Project Management Journal, June 2003:  6.

State Farm Insurance Companies, “State Farm® Code of Conduct 2011“.  [http://www.statefarm.com/_pdf/2011-code-of-conduct.pdf

United States Department of Labor, Bureau of Labor Statistics, “Occupational Outlook Handbook, 2010-11 Edition,” “Financial Managers”, [http://www.bls.gov/oco/ocos010.htm].

United States Senate Committee on Banking, Housing, & Urban Affairs, “Brief Summary of the Dodd-Frank Wall Street Reform and Consumer Protection Act”.  [http://banking.senate.gov/public/_files/070110_Dodd_Frank_Wall_Street_Reform_comprehensive_summary_Final.pdf].

United States Department of the Treasury, “Civil Penalties Information Chart”.  “Enforcement Information for June 3, 2010”, [http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20100603_33.aspx] and “Enforcement Information for April 7, 2011”, [http://www.treasury.gov/resource-center/sanctions/CivPen/Documents/04072011.pdf].

United States Treasury, “Home/Resource Center/FAQs/Sanctions/Frequently Asked Questions and Answers.” [http://www.treasury.gov/resource-center/faqs/Sanctions/Pages/answer.aspx].

United States Treasury, Office of Foreign Assets Control, “Foreign Assets Control Regulations and the Insurance Industry”, April 29, 2004: 1, [http://www.ustreas.gov/offices/enforcement/ofac/regulations/t11facin.pdf].

United Stated Department of the Treasury, “Terrorism Sanctions:  What is Your OFAC Risk”, [http://www.treas.gov/offices/enforcement/ofac/programs/terror/terror.shtml].

ENDNOTES


[1] National Capital Language Resource Center (NCLRC).  “The Essentials of Language Teaching, Goal:  Communicative Competence.”  [http://www.nclrc.org/essentials/goalsmethods/goal.htm.]  Site accessed August 31, 2007.

[2] The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in 2010, established a Federal Insurance Office, which is authorized to gather information about the insurance industry and to monitor the insurance industry for systemic risk purposes.  This Act also established the Financial Stability Oversight Council.  The Council has authority to monitor non-bank financial institutions and it will recommend that the Federal Reserve assume regulatory authority for companies it deems systemically important.  United States Senate Committee on Banking, Housing, & Urban Affairs, “Brief Summary of the Dodd-Frank Wall Street Reform and Consumer Protection Act”.  [http://banking.senate.gov/public/_files/070110_Dodd_Frank_Wall_Street_Reform_comprehensive_summary_Final.pdf].  Site accessed June 1, 2011.  Because the affect of these federal actions is yet undetermined, no further discussion of these issues is made.

[3] United States Treasury, Office of Foreign Assets Control, “Foreign Assets Control Regulations and the Insurance Industry”, April 29, 2004: 1. [http://www.ustreas.gov/offices/enforcement/ofac/regulations/t11facin.pdf], site accessed March 6, 2006.  Although Sec. 326 of the USAPATRIOT Act (Customer Identification Program) does not apply to P&C insurers [see 31 CFR 103.16 (a) (4)], all businesses are required to check various government lists to confirm that there is no business activity with a Specially Designated National (SDN) or a Specially Designated Narcotics Trafficker (SDNTK).

[4] United States Treasury, “Home/Resource Center/FAQs/Sanctions/Frequently Asked Questions and Answers.” “At what point must an insurer check to determine whether an applicant for a policy is an SDN? If you receive an application from an SDN for a policy, you are under an obligation not to issue the policy.  Remember that when you are insuring someone, you are providing a service to that person.  You are not allowed to provide any services to an SDN. If the SDN sends a deposit along with the application, you must block the payment. [09-10-02].”  [http://www.treasury.gov/resource-center/faqs/Sanctions/Pages/answer.aspx], site accessed April 11, 2011.

[5] A commercial broker handling an insurance risk outside the United States remitted a penalty of $122,408 to OFAC in 2011 for allegedly providing commercial multi peril insurance policies for property located in a sanctioned country.

 [6] A property and casualty insurance company remitted a penalty state farm bank compliance test answers $11,000 to OFAC in 2011 for allegedly providing a personal automobile insurance policy without an OFAC license to an individual named as a SDNTK.

[7] A life insurance company remitted a penalty of $22,500 to OFAC in 2011 for allegedly mailing a death benefit claim payment to a sanctioned country in violation of OFAC regulations.

Endnotes 5, 6, and 7:  United States Department of the Treasury, “Civil Penalties Information Chart”.  Endnotes 4 and 6:  “Enforcement Information for April 7, 2011”, [http://www.treasury.gov/resource-center/sanctions/CivPen/Documents/04072011.pdf]; Endnote 5:  “Enforcement Information for June 3, 2010”, [http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20100603_33.aspx], sites accessed April 12, 2011.

[8] United States Treasury, “Home/Resource Center/FAQs/Sanctions/Frequently Asked Questions and Answers.” “Is it sufficient if my company screens life insurance policies only prior to policy issuance?. . It also is important to screen the policyholder and beneficiary prior to paying a claim. (05-01-03)” [http://www.treasury.gov/resource-center/faqs/Sanctions/Pages/answer.aspx], site accessed April 11, 2011.

[9] United Stated Department of the Treasury, “Terrorism Sanctions:  What is Your OFAC Risk”, [http://www.treas.gov/offices/enforcement/ofac/programs/terror/terror.shtml], site accessed April 11, 2009.

 [10] However, the New York state insurance department issued a circular letter stating its expectations that insurance companies will abide by the requirements of OFAC and two other federal laws that do not explicitly apply to the business of insurance.  State of New York Insurance Department, “Circular Letter No. 11 (2009),” “Compliance with the Federal Bank Secrecy Act, Foreign Corrupt Practices Act, and Office of Foreign Assets Control Requirements,” June 29, 2009, [http://www.ins.state.ny.us/circltr/2009/cl2009_11.htm].  The requirements of the Bank Secrecy Act apply to “covered products,” the features of which are not generally underwritten by P&C companies.  The requirements of the Foreign Corrupt Practices Act apply to U.S. companies that do business with officials of foreign governments.  Site accessed July 26, 2009.

[11] National Association of Insurance Commissioners, NAIC/AICPA Working Group, Financial Condition (E) Committee, “Model Audit Rule Revisions,” [http://www.naic.org/committees_e_naic_aicpa_wg.htm], site accessed July 26, 2009.

[12] National Association of Insurance Commissioners, News Release “NAIC Adopts New Climate Risk Disclosure Survey,” March 28, 2010.  [http://www.naic.org/Releases/2010_docs/NAIC_adopts_new_climate_survey.htm], site accessed March 29, 2010.

[13] National Association of Insurance Commissioners, “Climate Change and Global Warming (EX) Task Force 2010 Fall National Meeting, Sunday, October 17, 2010, 5:00 – 6:00 p.m. Handout”.  [http://www.naic.org/documents/committees_ex_climate_101017_handout.pdf], site accessed April 10, 2011.

[14] Department of Health and Human Services, “Mandatory Insurer Reporting:  Liability Insurance, Self-Insurance, No-Fault Insurance and Workers Compensation”, [http://www.cms.hhs.gov/MandatoryInsRep/03_Liability_Self_No_Fault_Insurance_and_Workers_Compensation.asp#TopOfPage], site accessed April 22, 2009, and [http://www.cms.hhs.gov/MandatoryInsRep/04_Whats_New.asp], site accessed March 20, 2010.

[15] Keith F. Snider and Mark E. Nissen, “Beyond the Body of Knowledge:  A Knowledge-Flow Approach to Project Management Theory and Practice”, Project Management Journal, June 2003:  6.

[16] Snider and Nissen:  6.

[17] Auditor independence is a requirement with respect to financial audits of publicly traded companies via rules of the Securities and Exchange Commission.  See 17 CFR Parts 210 and 240 [http://www.sec.gov/rules/final/33-7919.htm].  Additionally, in the “International Standards for the Professional Practice of Internal Auditing”, The Institute of Internal Auditors state:  “The internal audit activity must be independent, and internal auditors must be objective in performing their work.”  [http://www.theiia.org/guidance/standards-and-guidance/ippf/standards/full-standards], both sites accessed December 29, 2009.

[18] Many of these activities are affected by a state’s adoption of the Uniform Commercial Code (UCC)[18], which seeks to standardize interstate commercial transactions.  [18]Cornell University Law School, LII/Legal Information Institute, “UCC:  uniform commercial code”, [http://www.law.cornell.edu/ucc/1/], accessed May 15, 2011.

[19] United States Department of Labor, Bureau of Labor Statistics, “Occupational Outlook Handbook, 2010-11 Edition,” “Financial Managers”, [http://www.bls.gov/oco/ocos010.htm], accessed December 24, 2009.  The typical duties of a treasurer and controller were obtained from this Handbook.

[20] Corporate Legal Times, “The Roundtable Sponsored by Littler Mendelson:  Compliance Matters – What Should You Be Doing to Build Better Compliance Policies?”  In “the average corporation, a third of compliance falls in labor and employment law.” September 2005:1.  [http://www.insidecounsel.com/pdfs/SeptRoundtable.pdf], site accessed April 25, 2006.

[21] New York Stock Exchange, “Listed Company Manual”, Section 301.00 Introduction, [http://www.nyse.com/Frameset.html?displayPage=/listed/1022221393251.html], site accessed March 18, 2006.

[22] CNN.com, The Internet Home of Fortune, “Fortune 500 2011” Rankings by “Industry: Insurance: P & C (Stock), [http://money.cnn.com/magazines/fortune/fortune500/2011/industries/182/index.html and Mutuals [http://money.cnn.com/magazines/fortune/fortune500/2011/industries/184/index.html, sites accessed May 10, 2011.

[23] 1. Berkshire Hathaway Group, “Berkshire Hathaway Inc. – Code of Business Conduct and Ethics.”  [http://www.berkshirehathaway.com/govern/ethics.pdf], site accessed May 10, 2011.

2. American International Group, “Code of Conduct” [http://www.aigcorporate.com/corpgovernance/Code_of_Conduct2010/AIGCodeOfConductEng.pdf], site accessed May 10, 2011.

3. State Farm Insurance Companies, “State Farm® Code of Conduct 2011“.  [http://www.statefarm.com/_pdf/2011-code-of-conduct.pdf], site accessed May 10, 2011.


Joseph L. Wiest, CPCU, ARC, ACP, is a corporate compliance director of market conduct with a top ten P&C insurance group.  He is a graduate of the University of Nebraska, having earned a B.S. in business administration. Since 1984, he has been employed in the insurance industry, working 20 years for a major personal lines direct writer, holding positions in customer service, line underwriting, staff underwriting, and compliance.  He also served as the compliance officer of a nonstandard auto carrier for two years.  He has earned a business ethics certificate from Colorado State University in addition to nine other professional insurance designations.

Tags: Business Process Improvement, Compliance, Operational Excellence, Organizational Alignment

Источник: https://www.perrknight.com/2011/07/06/understanding-vertical-horizontal-compliance-processes-means-increased-quality-reduced-costs/

State farm bank compliance test answers -

Methods of Payment

Don’t lose potential business to competitors by overlooking different payment options which could be attractive to your international buyer. Explore several payment methods and find the one best suited to your needs.

Many American businesses new to selling U.S. products overseas expect or prefer to be paid in full in advance. While there is zero risk of non-payment if you do business this way, you risk losing business by overlooking competitors willing to offer buyers better payment options. Consider more attractive payment methods as outlined in this article and accompanying videos.

Methods of Payment

To succeed in today’s global marketplace and win sales against foreign competitors, exporters must offer their customers attractive sales terms supported by the appropriate payment methods. Because getting paid in full and on time is the ultimate goal for each export sale, an appropriate payment method must be chosen carefully to minimize the payment risk while also accommodating the needs of the buyer. As shown in figure 1, there are five primary methods of payment for international transactions. During or before contract negotiations, you should consider which method in the figure is mutually desirable for you and your customer.

Payment Risk Diagram

Key Points

  • International trade presents a spectrum of risk, which causes uncertainty over the timing of payments between the exporter (seller) and importer (foreign buyer).
  • For exporters, any sale is a gift until payment is received. 
  • Therefore, exporters want to receive payment as soon as possible, preferably as soon as an order is placed or before the goods are sent to the importer.
  • For importers, any payment is a donation until the goods are received.
  • Therefore, importers want to receive the goods as soon as possible but to delay payment as long as possible, preferably until after the goods are resold to generate enough income to pay the exporter.

Cash-in-Advance

With cash-in-advance payment terms, an exporter can avoid credit risk because payment is received before the ownership of the goods is transferred. For international sales, wire transfers and credit cards are the most commonly used cash-in-advance options available to exporters. With the advancement of the Internet, escrow services are becoming another cash-in-advance option for small export transactions. However, requiring payment in advance is the least attractive option for the buyer, because it creates unfavorable cash flow. Foreign buyers are also concerned that the goods may not be sent if payment is made in advance. Thus, exporters who insist on this payment method as their sole manner of doing business may lose to competitors who offer more attractive payment terms. Learn more about Cash-in-Advance.

Letters of Credit

Letters of credit (LCs) are one of the most secure instruments available to international traders. An LC is a commitment by a bank on behalf of the buyer that payment will be made to the exporter, provided that the terms and conditions stated in the LC have been met, as verified through the presentation of all required documents. The buyer establishes credit and pays his or her bank to render this service. An LC is useful when reliable credit information about a foreign buyer is difficult to obtain, but the exporter is satisfied with the creditworthiness of the buyer’s foreign bank. An LC also protects the buyer since no payment obligation arises until the goods have been shipped as promised. Learn more about Letters of Credit.

Documentary Collections

A documentary collection (D/C) is a transaction whereby the exporter entrusts the collection of the payment for a sale to its bank (remitting bank), which sends the documents that its buyer needs to the importer’s bank (collecting bank), with instructions to release the documents to the buyer for payment. Funds are received from the importer and remitted to the exporter through the banks involved in the collection in exchange for those documents. D/Cs involve using a draft that requires the importer to pay the face amount either at sight (document against payment) or on a specified date (document against acceptance). The collection letter gives instructions that specify the documents required for the transfer of title to the goods. Although banks do act as facilitators for their clients, D/Cs offer no verification process and limited recourse in the event of non-payment. D/Cs are generally less expensive than LCs. Learn more about Documentary Collections.

Open Account

An open account transaction is a sale where the goods are shipped and delivered before payment is due, which in international sales is typically in 30, 60 or 90 days. Obviously, this is one of the most advantageous options to the importer in terms of cash flow and cost, but it is consequently one of the highest risk options for an exporter. Because of intense competition in export markets, foreign buyers often press exporters for open account terms since the extension of credit by the seller to the buyer is more common abroad. Therefore, exporters who are reluctant to extend credit may lose a sale to their competitors. Exporters can offer competitive open account terms while substantially mitigating the risk of non-payment by using one or more of the appropriate trade finance techniques covered later in this Guide. When offering open account terms, the exporter can seek extra protection using export credit insurance.

Consignment

Consignment in international trade is a variation of open account in which payment is sent to the exporter only after the goods have been sold by the foreign distributor to the end customer. An international consignment transaction is based on a contractual arrangement in which the foreign distributor receives, manages, and sells the goods for the exporter who retains title to the goods until they are sold. Clearly, exporting on consignment is very risky as the exporter is not guaranteed any payment and its goods are in a foreign country in the hands of an independent distributor or agent. Consignment helps exporters become more competitive on the basis of better availability and faster delivery of goods. Selling on consignment can also help exporters reduce the direct costs of storing and managing inventory. The key to success in exporting on consignment is to partner with a reputable and trustworthy foreign distributor or a third-party logistics provider. Appropriate insurance should be in place to cover consigned goods in transit or in possession of a foreign distributor as well as to mitigate the risk of non-payment.

Источник: https://www.trade.gov/methods-payment

Cotton States Mutual Insurance Company, et al., Plaintiffs-appellants, v. J.o. Anderson, Jr., et al., Defendants-appellees, 749 F.2d 663 (11th Cir. 1984)

This is an appeal from an adverse summary judgment ruling, in which the district court refused to declare O.C.G.A. Sec. 33-34-5(b) (1982) (the Georgia No-Fault Act) unconstitutional on due process, equal protection and other constitutional grounds. We affirm. Although appellant's argument is extremely persuasive, after full consideration, we conclude that we should not use the statute's "tortured history"  of interpretation in the Georgia courts as a basis for holding it unconstitutional.

As an initial matter, we must dispose of the question, raised by the appellee State of Georgia for the first time at oral argument, of whether appellant is collaterally estopped from raising these constitutional objections to the No-Fault Act. Appellee grounds this objection on the fact that appellant had raised almost identical arguments in prior litigation before the Georgia courts, and those issues were decided adversely to the appellant. See Cotton States Mutual Insurance Co. v. McFather, 251 Ga. 739, 741, 309 S.E.2d 799, 801-02 (1983) (hereinafter McFather) . Although appellee's collateral estoppel argument is a formidable one, we will exercise the discretion available to us, see Parklane Hosiery Co. v. Shore, 439 U.S. 322, 331, 99 S. Ct. 645, 651, 58 L. Ed. 2d 552 (1979), and reach the merits of this case.

We recognize that appellee did not raise this issue at the trial level; nevertheless we also recognize that appellee was unable to do so because of the parallel progression of the two cases in which the constitutional objections were made. The parties at bar filed their briefs in the instant case prior to the time that the state court decision, which held adversely to appellant on the constitutional claims, was issued.  Under these circumstances, we hold that the collateral estoppel issue, though not raised in the district court, was not waived.

Collateral estoppel is properly invoked "if the issue in the subsequent proceeding is identical to the one involved in the prior action, the issue was actually litigated, and the determination of the issue was necessary in the prior action." Williams v. Bennett, 689 F.2d 1370, 1381 (11th Cir. 1982) (upholding the offensive use of collateral estoppel with regard to constitutional claims). It is clear that these three criteria are met in the case at bar. The constitutional issues raised in the McFather litigation were virtually identical to those raised in the instant case. Though the Georgia Supreme Court's treatment of those issues was admittedly cursory, they were specifically addressed and decided by that court. Furthermore, a litigant may assert collateral estoppel, though he was not a party to the prior suit. Bank of Heflin v. Landmark Inns, 604 F.2d 354 (5th Cir. 1979). Therefore, the State of Georgia is free to invoke collateral estoppel offensively against appellant.

The offensive use of collateral estoppel raises particular judicial concerns; it is governed by slightly different principles than the historic defensive use of the issue preclusion claim. See Nations v. Sun Oil Co., 705 F.2d 742, 744 (5th Cir. 1983) ("Collateral estoppel is an equitable doctrine. Offensive collateral estoppel is even a cut above that in the scale of equitable values."); Johnson v. United States, 576 F.2d 606, 614 (5th Cir. 1978), cert. denied, 451 U.S. 1018, 101 S. Ct. 3007, 69 L. Ed. 2d 389 (1981). The Supreme Court has only recently approved the offensive use of collateral estoppel. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 99 S. Ct. 645, 58 L. Ed. 2d 522 (1979). Moreover, the Court has cautioned that fairness to both parties must be considered when it is applied. Id. at 331, 99 S. Ct. at 651. Of primary importance is whether the opposing party had an adequate incentive to litigate vigorously in the previous proceedings and whether he received a full and fair hearing in that proceeding.

Once, however, the litigant has had a full and fair opportunity to litigate his claim, the trial court has broad discretion in deciding whether offensive collateral estoppel is appropriate. See Parklane Hosiery, 439 U.S. at 331, 99 S. Ct. at 651. The Supreme Court has recently reaffirmed that collateral estoppel promotes "the comity between state and federal courts that has been recognized as a bulwark of the federal system." Allen v. McCurry, 449 U.S. 90, 95-6, 101 S. Ct. 411, 415, 66 L. Ed. 2d 308 (1980). The principles of federalism and comity are implicated in the instant case. Appellant is urging the federal courts to declare the state statute unconstitutional (by federal standards) because the state courts have experienced difficulty in their interpretations. At least in the context of civil rights suits, the Supreme Court has stated that Congress did not intend "to allow relitigation of federal issues decided after a full and fair hearing in a state court simply because the state court's decision may have been erroneous." Id. at 101, 101 S. Ct. at 418. Therefore, the confusing interpretations given this statute by the state courts should not be a basis for denying the preclusive effect of collateral estoppel.

However, the Supreme Court has also noted that preclusion may be inappropriate, particularly in constitutional adjudication, when issues of law arise in successive actions. Montana v. United States, 440 U.S. 147, 160-63, 99 S. Ct. 970, 977-78, 59 L. Ed. 2d 210 (1979). In addition, special difficulties arise when precluding a party who did not have the initiative in the prior action. See Johnson, 576 F.2d at 614. Moreover, this circuit has recently noted that the discretion used when determining if preclusion is appropriate is not unlimited. Abuse of that discretion will result if "there is a significant likelihood of substantial unfairness" to the parties if preclusion is applied. Deweese v. Town of Palm Beach, 688 F.2d 731, 734 (11th Cir. 1982). The likelihood of unfairness increases when conflicting rulings involve the same defendant.

Adopting this broad discretion as our own standard in determining the collateral estoppel question, we decide not to apply collateral estoppel in the instant case. In light of the unique history of the statute challenged here  and the important principles of federalism involved when a federal court is asked to determine the constitutionality of a state statute, we proceed to the merits of this case.

B. CONSTITUTIONAL CHALLENGES TO STATE STATUTES

Federal courts must be slow to declare state statutes unconstitutional, see Ford v. Strickland, 676 F.2d 434, 442 (11th Cir. 1982) (" [W]e do not sit to question [the state supreme court's] interpretation of that state's statutes"), and they must be especially slow to do so on the ground of the state courts' inability to consistently interpret their own statutes.  It is well-settled that " [s]tate courts have the right to construe their own statutes," Bank of Heflin v. Miles, 621 F.2d 108, 113 (5th Cir. 1980), and federal courts are bound by that state interpretation. Id. at 114. See also Sanchez v. United States, 696 F.2d 213, 216 (2d Cir. 1982) ("To comply with the principle of comity which undergirds our federal system, we are obliged to give full effect to decisions of New York's highest court on issues involving the application of New York law."). When ruling upon the constitutionality of a state statute, a federal court "may only consider the statute's plain meaning and authoritative state court constructions of the statute." Florida Businessmen v. State of Florida, 499 F. Supp. 346, 352 (N.D. Fla. 1980).

With this limited  scope of review in mind, we now turn to the statute challenged in the instant case. The No-Fault Act, prior to its amendment in 1982, provided that:

Each application for a policy of motor vehicle liability insurance sold in this state must contain separate spaces for the insured to indicate his acceptance or rejection of each of the optional coverages listed in subsection (2) of this Code section and no such policy shall be issued in this state unless these spaces are completed and signed by the prospective insured.

O.C.G.A. Sec. 33-34-5(b).

The litigation over this statute exists because of conflicting interpretations as to what burden the statute imposes on no-fault insurers to obtain specific acceptance or rejection of optional coverage from each applicant. We note initially that the No-Fault Act is facially constitutional. See Erznoznik v. City of Jacksonville, 422 U.S. 205, 216, 95 S. Ct. 2268, 2276, 45 L. Ed. 2d 125 (1974) (" [A] state statute should not be deemed facially invalid unless it is not readily subject to a narrowing construction by the state courts...."). See also Sawyer v. Sandstrom, 615 F.2d 311, 315 (5th Cir. 1980). The Supreme Court has stated that " [i]n evaluating a facial challenge to a state law, a federal court must, of course, consider any limiting construction that a state court ... has proffered." Hoffman Estates v. Flipside, 455 U.S. 489, 494 n. 5, 102 S. Ct. 1186, 1191 n. 5, 71 L. Ed. 2d 362 (1982). The Georgia Supreme Court has recently attempted to clarify its position as to the meaning of the statute. See Flewellan v. Atlanta Casualty Co., 250 Ga. 709, 300 S.E.2d 673 (1983).

A brief description of the history of the Georgia courts' attempts to interpret the No-Fault Act illustrates the confusion the statute has wrought.  The No-Fault Act's tortured history originated with the Georgia Court of Appeals' decision in Jones v. State Farm Mutual Auto Insurance Co., 156 Ga.App. 230, 274 S.E.2d 623 (1980), cert. dismissed, 248 Ga. 46, 280 S.E.2d 837 (1981) (hereinafter "Jones"). (Certiorari was initially granted in Jones, but then dismissed by the Georgia Supreme Court as improvidently granted.) Jones interpreted the No-Fault Act to require multiple signature lines on applications to indicate acceptance or rejection of optional personal injury protection (PIP) coverage. On December 1, 1982, the Georgia Court of Appeals, en banc, overruled Jones. Atlanta Casualty Co. v. Flewellen, 164 Ga.App. 885, 300 S.E.2d 166 (1982). In the Flewellen decision, the Court of Appeals stated that "to require a separate and repetitive signature by each subspace defies the rules of logic and reason and blindly applies a rule of literalness." Id. at 888, 300 S.E.2d at 169. Shortly thereafter, however, the Georgia Supreme Court, having granted certiorari sua sponte, reversed the Court of Appeals. In that decision, the court held that two signature lines, one indicating acceptance or rejection of optional PIP and another to indicate acceptance or rejection of vehicle damage coverage, would meet the statutory requirements. Flewellen v. Atlanta Casualty Co., 250 Ga. 709, 711, 300 S.E.2d 673, 676 (1983). Since the Flewellen decision, the Georgia Supreme Court has held that substantial compliance is sufficient to meet the statutory requirements. St. Paul Fire & Marine Insurance Co. v. Nixon, 252 Ga. 469, 314 S.E.2d 215 (1984). However, if the information regarding optional PIP coverage is contained in a small square in an abbreviated form, then the insurance application will not meet the substantial compliance test. Tolison v. Georgia Farm Bureau Mutual Insurance Co., 253 Ga. 97, 317 S.E.2d 185 (1984). 

Given the background of this confused judicial history,  we now turn to the constitutional objections raised by appellant. Two basic constitutional arguments are made. First, appellant contends that the statute is unconstitutionally vague, and therefore constitutes a denial of its procedural due process rights. Second, appellant contends that the penalties and punitive damages provisions of the No-Fault Act contravene its due process and equal protection rights.

Undoubtedly, appellant's strongest argument is that the statute is unconstitutionally vague. There is no question that the Georgia courts have found the No-Fault Act difficult to interpret. However, the standard of review with regard to commercial statutes is a very lenient one. Such statutes are impermissibly vague only if they provide " 'no rule or standard at all.' " Exxon Corp. v. Busbee, 644 F.2d 1030, 1033 (5th Cir.), cert. denied, 454 U.S. 932, 102 S. Ct. 430, 70 L. Ed. 2d 239 (1981) (quoting A.B. Small Co. v. American Sugar Refining Co., 267 U.S. 233, 239, 45 S. Ct. 295, 297, 69 L. Ed. 589 (1925)) . "Uncertainty ... is not enough for [the commercial regulatory statute] to be unconstitutionally vague; rather, it must be substantially incomprehensible." Id. at 1033. Though appellant urges us to adopt a more stringent standard of review,  we decline to do so. We hold that under the standard set forth in Exxon Corp. v. Busbee, the statute passes constitutional muster. 

As with a due process challenge to a commercial regulatory statute, an equal protection challenge is accorded minimal scrutiny. See Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 101 S. Ct. 715, 66 L. Ed. 2d 659 (1981). Only a "wholly arbitrary act" can not withstand an equal protection challenge to an economic regulatory statute. New Orleans v. Dukes, 427 U.S. 297, 303-04, 96 S. Ct. 2513, 2516-17, 49 L. Ed. 2d 511 (1976) (per curiam) . See also Minnesota v. Cloverleaf, 449 U.S. at 464, 101 S. Ct. at 723 (parties asserting an irrational classification may not prevail "so long as the question is debatable"). Appellant asserts that the No-Fault Act violates the equal protection rights of no-fault insurers. However, this constitutional challenge must be evaluated under this deferential standard.

The penalty provisions built-in to the No-Fault Act clearly bear a rational relationship to the legislature's dual purpose of encouraging prompt payment and avoiding litigation over no-fault claims. In light of the fact that state legislatures are given wide latitude in the regulation of commercial interests, New Motor Vehicle Board of California v. Orrin W. Fox Co., 439 U.S. 96, 107, 99 S. Ct. 403, 410, 58 L. Ed. 2d 361 (1978), the No-Fault Act passes constitutional muster.

Accordingly, the district court's order granting summary judgment in favor of appellee is AFFIRMED.

Источник: https://law.justia.com/cases/federal/appellate-courts/F2/749/663/359435/

While these carriers underwrite a large number of policies, they differ on price, service quality and many other characteristics. To help you choose the best insurance company for your situation, we created a list of the 10 largest auto insurance companies in the U.S. and discussed what makes each of them unique.

What are the largest auto insurance companies?

When looking at the rankings of the top auto insurance companies in the United States, most of the names are recognizable due to their national television advertising campaigns.

The number one auto insurance company in the country in terms of market share and premiums written is State Farm, followed by Geico, Progressive and Allstate.

Find the Cheapest Insurance Quotes in Your Area

Yet the 10 largest insurance companies offer varied insurance rates, customer claims experiences and features. For shoppers looking for cheap rates, we always recommend comparing quotes from multiple insurers to find the best price.

Below we list the top 10 biggest insurers in the U.S. and provide more detail regarding what you should know about each of them. Click on any of the links in the table below to learn more about a particular insurer.

1. State Farm

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State Farm is a great auto insurance company for anyone who wants a local agent, a personalized experience and cheaper-than-average rates.

  • Average six-month premium: $307
  • Market share: 16%
  • Premiums written: $41.1 bn
  • ValuePenguin rating: 4/5
  • J.D. Power customer satisfaction score: 881
  • Read our full State Farm review

State Farm is the largest auto insurance company in the U.S. and possesses 16% of the total available market share. Over 15% of dollars spent on private passenger auto premiums in the U.S. is paid to State Farm.

The company currently employs approximately 60,000 employees and has nearly 19,000 agents. State Farm operates as a mutual insurance company, meaning that it's owned by its policyholders.

Among the largest widely available car insurers in this list, State Farm offered the cheapest car insurance rates in most parts of the U.S.

LEARN MORE: Cheapest Car Insurance Companies

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2. Geico

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We consider Geico to be one of the best auto insurance companies. Geico offers low rates, national availability and an easy shopping experience.

  • Average six-month premium: $390
  • Market share: 13%
  • Premiums written: $35.2 bn
  • ValuePenguin rating: 4/5
  • J.D. Power customer satisfaction score: 871
  • Read our full Geico review

Geico, well known for its advertisements featuring an animated gecko, has served as an underwriter to more than 16 million auto policies, which insure more than 24 million vehicles. The company's size allows it to employ more than 40,000 people across nine regional offices, three service centers and three claims centers.

Geico's original customer base consisted of U.S. government employees and military personnel. Today, the insurance company's customer base has expanded to include people in the private sector.

According to our research of the largest auto insurance carriers, Geico is the best insurer for college students.

LEARN MORE: Best Car Insurance Companies for College Students

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3. Progressive

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Progressive offers especially competitive rates to drivers with previous accidents. However, claims satisfaction ratings and coverage options are average.

  • Average six-month premium: $394
  • Market share: 12%
  • Premiums written: $32.3 bn
  • ValuePenguin editor's rating: 3/5
  • J.D. Power customer satisfaction score: 856
  • Read our full Progressive review

Progressive — the third-biggest insurance company in the country — was established in 1937. The company offers the ability to purchase auto insurance in-person, online or by phone. Alternatively, customers can sign up through independent insurance agents.

The company employs more than 35,000 people and has over 400 offices. Progressive is a publicly traded company.

{"backgroundColor":"white","content":"\u003C\/p\u003E\n\n\u003Ch2 id=\"progressive\"\u003E3. Progressive\u003C\/h2\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"full pad-none align-left clearfix\"\u003E\n\u003Cdiv class=\"third pad align-left clearfix\"\u003E\n\u003Cdiv class=\"ReactComponent--root\"\u003E\n \u003Cdiv class=\"js-react-component-rendered js-react-component-AffiliateBanner\" data-component-name=\"AffiliateBanner\"\u003E\n \u003Cdiv class=\"AffiliateTileBanner--root AffiliateTileBanner--align-center \"\u003E\u003Cdiv class=\"AffiliateTileBanner--inner\"\u003E\u003Cdiv class=\"AffiliateTileBanner--wrapper\"\u003E\u003Cdiv class=\"AffiliateTileBanner--image\"\u003E\u003Ca class=\"Link--root AffiliateTileBanner--image-link \" href=\"https:\/\/insurance.mediaalpha.com\/zero-click.html?cu=https:\/\/www.progressive.com\/auto\/&carrier=Progressive;TKzt2XWu22mNOdQNJ2a4RzoV6BRPpNDUopJCfh7rAsgYilC61MaFepVn5p1L6_mIOJTZIazfFd3kcRBYBf9NIndYo-7WqA\" rel=\"nofollow\" target=\"_blank\" title=\"Progressive\"\u003E\u003Cimg alt=\"Progressive\" class=\"Image--root lazyload\" data-src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/progressive-2\" data-srcset=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/progressive-2 1x, \/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/referral_logos\/us\/insurance\/progressive-2 2x\" src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/e_blur:1000,q_1,f_auto\/referral_logos\/us\/insurance\/progressive-2\"\/\u003E\u003C\/a\u003E\u003C\/div\u003E\u003Cdiv class=\"AffiliateTileBanner--button\"\u003E\u003Cdiv class=\"AffiliateButtonV2--root \"\u003E\u003Ca class=\"Link--root Button--root Button--primary Button--fluid Button--square \" href=\"https:\/\/insurance.mediaalpha.com\/zero-click.html?cu=https:\/\/www.progressive.mediaalpha.com\\\/zero-click.html?cu=https:\\\/\\\/www.progressive.com\\\/auto\\\/&carrier=Progressive;TKzt2XWu22mNOdQNJ2a4RzoV6BRPpNDUopJCfh7rAsgYilC61MaFepVn5p1L6_mIOJTZIazfFd3kcRBYBf9NIndYo-7WqA\",\"name\":\"Progressive\"}\u003C\/div\u003E\n\u003C\/div\u003E\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"twothird pad align-left clearfix\"\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodePullquote--root\"\u003E\n \u003Cp class=\"ShortcodePullquote--text ShortcodePullquote--blue\"\u003E\n Progressive offers especially competitive rates to drivers with previous accidents. However, claims satisfaction ratings and coverage options are average.3 bn\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EValuePenguin editor's rating\u003C\/strong\u003E: 3\/5\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EJ.D. Power customer satisfaction score\u003C\/strong\u003E: 856\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cspan\u003E\u003Ca class=\"ShortcodeLink--root ShortcodeLink--white\" title=\"Read our full Progressive review\" href=\"https:\/\/www.valuepenguin.com\/progressive-insurance-review\"\u003ERead our full Progressive review\u003C\/a\u003E\u003C\/span\u003E\n \u003C\/li\u003E\n \u003C\/ul\u003E\n \u003C\/div\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\n\n\u003C\/p\u003E\n\n\u003Cp\u003E\n\u003C\/div\u003E\n\u003C\/p\u003E\n\n\u003Cp\u003EProgressive \u2014 the third-biggest insurance company in the country \u2014 was established in 1937. The company offers the ability to purchase auto insurance in-person, online or by phone. Alternatively, customers can sign up through independent insurance agents.\u003C\/p\u003E\n\n\u003Cp\u003EThe company employs more than 35,000 people and has over 400 offices. Progressive is a publicly traded company.\u003C\/p\u003E\n\n\u003Cp\u003E\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E","padding":"normal"}

4. Allstate

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Allstate typically has better-than-average claims satisfaction ratings, but higher rates. However, the insurer offers a variety of discounts that can make policies more affordable for customers.

  • Average six-month premium: $624
  • Market share: 9%
  • Premiums written: $23.8 bn
  • ValuePenguin editor's rating: 3/5
  • J.D. Power customer satisfaction score: 876
  • Read our full Allstate review

Established in 1931, Allstate is the second-largest publicly traded property and casualty insurance company in America. Similar to State Farm, Allstate has a roster of local agents ready to serve your needs. The company currently employs more than 46,000 people.

Esurance, a subsidiary of Allstate, operates in the same space. According to Allstate, the Esurance brand targets self-directed and brand-sensitive customers, while Allstate is geared towards customers who enjoy local and personal service.

In this list of the biggest car insurance companies, Allstate is our pick for the best customer service.

LEARN MORE: Best Car Insurance Companies for Customer Service

{"backgroundColor":"white","content":"\u003C\/p\u003E\n\n\u003Ch2 id=\"allstate\"\u003E4. Allstate\u003C\/h2\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"full pad-none align-left clearfix\"\u003E\n\u003Cdiv class=\"third pad align-left clearfix\"\u003E\n\u003Cdiv class=\"ReactComponent--root\"\u003E\n \u003Cdiv class=\"js-react-component-rendered js-react-component-AffiliateBanner\" data-component-name=\"AffiliateBanner\"\u003E\n \u003Cdiv class=\"AffiliateTileBanner--root AffiliateTileBanner--align-center \"\u003E\u003Cdiv class=\"AffiliateTileBanner--inner\"\u003E\u003Cdiv class=\"AffiliateTileBanner--wrapper\"\u003E\u003Cdiv class=\"AffiliateTileBanner--image\"\u003E\u003Ca class=\"Link--root AffiliateTileBanner--image-link \" href=\"https:\/\/insurance.mediaalpha.com\/zero-click.html?cu=https:\/\/www.allstate.com\/auto-insurance.aspx&carrier=Allstate;TKzt2XWu22mNOdQNJ2a4RzoV6BRPpNDUopJCfh7rAsgYilC61MaFepVn5p1L6_mIOJTZIazfFd3kcRBYBf9NIndYo-7WqA\" rel=\"nofollow\" target=\"_blank\" title=\"Allstate\"\u003E\u003Cimg alt=\"Allstate\" class=\"Image--root lazyload\" data-src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/allstate-3\" data-srcset=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/allstate-3 1x, \/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/referral_logos\/us\/insurance\/allstate-3 2x\" src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/e_blur:1000,q_1,f_auto\/referral_logos\/us\/insurance\/allstate-3\"\/\u003E\u003C\/a\u003E\u003C\/div\u003E\u003Cdiv class=\"AffiliateTileBanner--button\"\u003E\u003Cdiv class=\"AffiliateButtonV2--root \"\u003E\u003Ca class=\"Link--root Button--root Button--primary Button--fluid Button--square \" href=\"https:\/\/insurance.mediaalpha.com\/zero-click.html?cu=https:\/\/www.allstate.com\/auto-insurance.mediaalpha.com\\\/zero-click.html?cu=https:\\\/\\\/www.allstate.com\\\/auto-insurance.aspx&carrier=Allstate;TKzt2XWu22mNOdQNJ2a4RzoV6BRPpNDUopJCfh7rAsgYilC61MaFepVn5p1L6_mIOJTZIazfFd3kcRBYBf9NIndYo-7WqA\",\"name\":\"Allstate\"}\u003C\/div\u003E\n\u003C\/div\u003E\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"twothird pad align-left clearfix\"\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodePullquote--root\"\u003E\n \u003Cp class=\"ShortcodePullquote--text ShortcodePullquote--blue\"\u003E\n Allstate typically has better-than-average claims satisfaction ratings, but higher rates. However, the insurer offers a variety of discounts that can make policies more affordable for customers. 8 bn\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EValuePenguin editor's rating\u003C\/strong\u003E: 3\/5\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EJ.D. Power customer satisfaction score\u003C\/strong\u003E: 876\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cspan\u003E\u003Ca class=\"ShortcodeLink--root ShortcodeLink--white\" title=\"Read our full Allstate review\" href=\"https:\/\/www.valuepenguin.com\/allstate-auto-insurance-review\"\u003ERead our full Allstate review\u003C\/a\u003E\u003C\/span\u003E\n \u003C\/li\u003E\n \u003C\/ul\u003E\n \u003C\/div\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\n\n\u003C\/p\u003E\n\n\u003Cp\u003E\n\u003C\/div\u003E\n\u003C\/p\u003E\n\n\u003Cp\u003EEstablished in 1931, Allstate is the second-largest publicly traded property and casualty insurance company in America. Similar to State Farm, Allstate has a roster of local agents ready to serve your needs. The company currently employs more than 46,000 people.\u003C\/p\u003E\n\n\u003Cp\u003EEsurance, a subsidiary of Allstate, operates in the same space. According to Allstate, the Esurance brand targets self-directed and brand-sensitive customers, while Allstate is geared towards customers who enjoy local and personal service.\u003C\/p\u003E\n\n\u003Cp\u003EIn this list of the biggest car insurance companies, Allstate is our pick for the best customer service.\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cstrong\u003ELEARN MORE\u003C\/strong\u003E: \u003Cspan\u003E\u003Ca class=\"ShortcodeLink--root ShortcodeLink--black\" title=\"Best Car Insurance Companies for Customer Service\" href=\"https:\/\/www.valuepenguin.com\/best-auto-insurance#service\"\u003EBest Car Insurance Companies for Customer Service\u003C\/a\u003E\u003C\/span\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E","padding":"normal"}

5. USAA

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USAA is one of the best auto insurers in the country. If you meet their qualification criteria, you'll enjoy extremely competitive rates, great customer service and speedy claims responses. The only downside is USAA's restricted membership.

  • Average six-month premium: $223
  • Market share: 6%
  • Premiums written: $15.2 bn
  • ValuePenguin editor's rating: 4.5/5
  • J.D. Power customer satisfaction score: 890
  • Read our full USAA review

USAA was founded by 25 Army officers who decided to insure each other's vehicles in 1922. Today, the company serves millions of members associated with the U.S. military, including current and former service members, family of service members, and cadets or midshipmen.

USAA is headquartered in San Antonio. The corporate campus' length extends three-quarters of a mile. USAA is the largest private company located in San Antonio.

Because of its focus on the U.S. armed forces, USAA is our top pick for the best and cheapest car insurance for veterans and military service members.

LEARN MORE: Best Car Insurance Companies for Veterans and Military Families

{"backgroundColor":"white","content":"\u003C\/p\u003E\n\n\u003Ch2 id=\"usaa\"\u003E5. USAA\u003C\/h2\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"full pad-none align-left clearfix\"\u003E\n\u003Cdiv class=\"third pad align-left clearfix\"\u003E\n\u003Cdiv class=\"ReactComponent--root\"\u003E\n \u003Cdiv class=\"js-react-component-rendered js-react-component-AffiliateBanner\" data-component-name=\"AffiliateBanner\"\u003E\n \u003Cdiv class=\"AffiliateTileBanner--root AffiliateTileBanner--align-center \"\u003E\u003Cdiv class=\"AffiliateTileBanner--inner\"\u003E\u003Cdiv class=\"AffiliateTileBanner--wrapper\"\u003E\u003Cdiv class=\"AffiliateTileBanner--image\"\u003E\u003Ca class=\"Link--root AffiliateTileBanner--image-link \" href=\"https:\/\/www.usaa.com\/inet\/wc\/insurance-products?akredirect=true\" rel=\"nofollow\" target=\"_blank\" title=\"USAA\"\u003E\u003Cimg alt=\"USAA\" class=\"Image--root lazyload\" data-src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/usaa-3\" data-srcset=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/usaa-3 1x, \/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/referral_logos\/us\/insurance\/usaa-3 2x\" src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/e_blur:1000,q_1,f_auto\/referral_logos\/us\/insurance\/usaa-3\"\/\u003E\u003C\/a\u003E\u003C\/div\u003E\u003Cdiv class=\"AffiliateTileBanner--button\"\u003E\u003Cdiv class=\"AffiliateButtonV2--root \"\u003E\u003Ca class=\"Link--root Button--root Button--primary Button--fluid Button--square \" href=\"https:\/\/www.usaa.com\/inet\/wc\/insurance-products?usaa.com\\\/inet\\\/wc\\\/insurance-products?akredirect=true\",\"name\":\"USAA\"}\u003C\/div\u003E\n\u003C\/div\u003E\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"twothird pad align-left clearfix\"\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodePullquote--root\"\u003E\n \u003Cp class=\"ShortcodePullquote--text ShortcodePullquote--blue\"\u003E\n USAA is one of the best auto insurers in the country. If you meet their qualification criteria, you'll enjoy extremely competitive rates, great customer service and speedy claims responses. The only downside is USAA's restricted membership.2 bn\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EValuePenguin editor's rating\u003C\/strong\u003E: 4.5\/5\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EJ.D. Power customer satisfaction score\u003C\/strong\u003E: 890\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cspan\u003E\u003Ca class=\"ShortcodeLink--root ShortcodeLink--white\" title=\"Read our full USAA review\" href=\"https:\/\/www.valuepenguin.com\/usaa-insurance-review\"\u003ERead our full USAA review\u003C\/a\u003E\u003C\/span\u003E\n \u003C\/li\u003E\n \u003C\/ul\u003E\n \u003C\/div\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\n\n\u003C\/p\u003E\n\n\u003Cp\u003E\n\u003C\/div\u003E\n\u003C\/p\u003E\n\n\u003Cp\u003EUSAA was founded by 25 Army officers who decided to insure each other's vehicles in 1922. Today, the company serves millions of members associated with the U.S. military, including current and former service members, family of service members, and cadets or midshipmen.\u003C\/p\u003E\n\n\u003Cp\u003EUSAA is headquartered in San Antonio. The corporate campus' length extends three-quarters of a mile. USAA is the largest private company located in San Antonio.\u003C\/p\u003E\n\n\u003Cp\u003EBecause of its focus on the U.S. armed forces, USAA is our top pick for the best and cheapest car insurance for veterans and military service members.\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cstrong\u003ELEARN MORE\u003C\/strong\u003E: \u003Cspan\u003E\u003Ca class=\"ShortcodeLink--root ShortcodeLink--black\" title=\"Best Car Insurance Companies for Veterans and Military Families\" href=\"https:\/\/www.valuepenguin.com\/best-cheap-car-insurance-veterans-and-military-members\"\u003EBest Car Insurance Companies for Veterans and Military Families\u003C\/a\u003E\u003C\/span\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E","padding":"normal"}

6. Liberty Mutual

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Liberty Mutual's rates vary by location more than the typical insurer, and customers rank the company's claims satisfaction process as below average.

  • Average six-month premium: $627
  • Market share: 5%
  • Premiums written: $12.1 bn
  • ValuePenguin editor's rating: 3.5/5
  • J.D. Power customer satisfaction score: 867
  • Read our full Liberty Mutual review

Liberty Mutual is one of the largest insurance companies in the U.S. and has been around for over 100 years, including a large international presence — with operations in 17 countries. The international company sells property and casualty, health and life insurance policies.

Liberty Mutual's auto insurance offerings can be accessed via its call center, website, a local Liberty Mutual agent or broker, or representatives from its network of regional subsidiaries. One thing to note about Liberty Mutual's coverage is that rates are guaranteed for a year.

{"backgroundColor":"white","content":"\u003C\/p\u003E\n\n\u003Ch2 id=\"liberty-mutual\"\u003E6. Liberty Mutual\u003C\/h2\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"full pad-none align-left clearfix\"\u003E\n\u003Cdiv class=\"third pad align-left clearfix\"\u003E\n\u003Cdiv class=\"ReactComponent--root\"\u003E\n \u003Cdiv class=\"js-react-component-rendered js-react-component-AffiliateBanner\" data-component-name=\"AffiliateBanner\"\u003E\n \u003Cdiv class=\"AffiliateTileBanner--root AffiliateTileBanner--align-center \"\u003E\u003Cdiv class=\"AffiliateTileBanner--inner\"\u003E\u003Cdiv class=\"AffiliateTileBanner--wrapper\"\u003E\u003Cdiv class=\"AffiliateTileBanner--image\"\u003E\u003Ca class=\"Link--root AffiliateTileBanner--image-link \" href=\"https:\/\/insurance.mediaalpha.com\/zero-click.html?cu=https:\/\/www.libertymutual.com\/&carrier=Liberty%20Mutual;TKzt2XWu22mNOdQNJ2a4RzoV6BRPpNDUopJCfh7rAsgYilC61MaFepVn5p1L6_mIOJTZIazfFd3kcRBYBf9NIndYo-7WqA\" rel=\"nofollow\" target=\"_blank\" title=\"Liberty Mutual\"\u003E\u003Cimg alt=\"Liberty Mutual\" class=\"Image--root lazyload\" data-src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/libertymutual-3\" data-srcset=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/libertymutual-3 1x, \/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/referral_logos\/us\/insurance\/libertymutual-3 2x\" src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/e_blur:1000,q_1,f_auto\/referral_logos\/us\/insurance\/libertymutual-3\"\/\u003E\u003C\/a\u003E\u003C\/div\u003E\u003Cdiv class=\"AffiliateTileBanner--button\"\u003E\u003Cdiv class=\"AffiliateButtonV2--root \"\u003E\u003Ca class=\"Link--root Button--root Button--primary Button--fluid Button--square \" href=\"https:\/\/insurance.mediaalpha.com\/zero-click.html?cu=https:\/\/www.libertymutual.mediaalpha.com\\\/zero-click.html?cu=https:\\\/\\\/www.libertymutual.com\\\/&carrier=Liberty%20Mutual;TKzt2XWu22mNOdQNJ2a4RzoV6BRPpNDUopJCfh7rAsgYilC61MaFepVn5p1L6_mIOJTZIazfFd3kcRBYBf9NIndYo-7WqA\",\"name\":\"Liberty Mutual\"}\u003C\/div\u003E\n\u003C\/div\u003E\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"twothird pad align-left clearfix\"\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodePullquote--root\"\u003E\n \u003Cp class=\"ShortcodePullquote--text ShortcodePullquote--blue\"\u003E\n Liberty Mutual's rates vary by location more than the typical insurer, and customers rank the company's claims satisfaction process as below average. 1 bn\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EValuePenguin editor's rating\u003C\/strong\u003E: 3.5\/5\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EJ.D. Power customer satisfaction score\u003C\/strong\u003E: 867\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cspan\u003E\u003Ca class=\"ShortcodeLink--root ShortcodeLink--white\" title=\"Read our full Liberty Mutual review\" href=\"https:\/\/www.valuepenguin.com\/liberty-mutual-insurance-review\"\u003ERead our full Liberty Mutual review\u003C\/a\u003E\u003C\/span\u003E\n \u003C\/li\u003E\n \u003C\/ul\u003E\n \u003C\/div\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\n\n\u003C\/p\u003E\n\n\u003Cp\u003E\n\u003C\/div\u003E\n\u003C\/p\u003E\n\n\u003Cp\u003ELiberty Mutual is one of the largest insurance companies in the U.S. and has been around for over 100 years, including a large international presence \u2014 with operations in 17 countries. The international company sells property and casualty, health and life insurance policies.\u003C\/p\u003E\n\n\u003Cp\u003ELiberty Mutual's auto insurance offerings can be accessed via its call center, website, a local Liberty Mutual agent or broker, or representatives from its network of regional subsidiaries. One thing to note about Liberty Mutual's coverage is that rates are guaranteed for a year.\u003C\/p\u003E\n\n\u003Cp\u003E\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E","padding":"normal"}

7. Farmers

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Farmers offers decent discounts, coverage options and great customer service. However, Farmers' non-competitive rates may be cost-prohibitive for some shoppers.

  • Average six-month premium: $553
  • Market share: 4%
  • Premiums written: $10.7 bn
  • ValuePenguin editor's rating: 4/5
  • J.D. Power customer satisfaction score: 872
  • Read our full Farmers review

Farmers began as an insurance company providing coverage to farmers' vehicles. Since then it has evolved to become the seventh-largest insurance company in the country.

It’s hard to find an insurance company that offers more products than Farmers. It offers basic auto insurance, pet insurance and even investment products among a variety of other insurance products. Farmers employs nearly 13,000 people, underwriting more than 19 million policies across 50 states.

{"backgroundColor":"white","content":"\u003C\/p\u003E\n\n\u003Ch2 id=\"farmers\"\u003E7. Farmers\u003C\/h2\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"full pad-none align-left clearfix\"\u003E\n\u003Cdiv class=\"third pad align-left clearfix\"\u003E\n\u003Cdiv class=\"ReactComponent--root\"\u003E\n \u003Cdiv class=\"js-react-component-rendered js-react-component-AffiliateBanner\" data-component-name=\"AffiliateBanner\"\u003E\n \u003Cdiv class=\"AffiliateTileBanner--root AffiliateTileBanner--align-center \"\u003E\u003Cdiv class=\"AffiliateTileBanner--inner\"\u003E\u003Cdiv class=\"AffiliateTileBanner--wrapper\"\u003E\u003Cdiv class=\"AffiliateTileBanner--image\"\u003E\u003Ca class=\"Link--root AffiliateTileBanner--image-link \" href=\"https:\/\/www.farmers.com\/\" rel=\"nofollow\" target=\"_blank\" title=\"Farmers\"\u003E\u003Cimg alt=\"Farmers\" class=\"Image--root lazyload\" data-src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/farmers-3\" data-srcset=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/farmers-3 1x, \/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/referral_logos\/us\/insurance\/farmers-3 2x\" src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/e_blur:1000,q_1,f_auto\/referral_logos\/us\/insurance\/farmers-3\"\/\u003E\u003C\/a\u003E\u003C\/div\u003E\u003Cdiv class=\"AffiliateTileBanner--button\"\u003E\u003Cdiv class=\"AffiliateButtonV2--root \"\u003E\u003Ca class=\"Link--root Button--root Button--primary Button--fluid Button--square \" href=\"https:\/\/www.farmers.farmers.com\\\/\",\"name\":\"Farmers\"}\u003C\/div\u003E\n\u003C\/div\u003E\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"twothird pad align-left clearfix\"\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodePullquote--root\"\u003E\n \u003Cp class=\"ShortcodePullquote--text ShortcodePullquote--blue\"\u003E\n Farmers offers decent discounts, coverage options and great customer service. However, Farmers' non-competitive rates may be cost-prohibitive for some shoppers.7 bn\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EValuePenguin editor's rating\u003C\/strong\u003E: 4\/5\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EJ.D. Power customer satisfaction score\u003C\/strong\u003E: 872\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cspan\u003E\u003Ca class=\"ShortcodeLink--root ShortcodeLink--white\" title=\"Read our full Farmers review\" href=\"https:\/\/www.valuepenguin.com\/farmers-insurance-review\"\u003ERead our full Farmers review\u003C\/a\u003E\u003C\/span\u003E\n \u003C\/li\u003E\n \u003C\/ul\u003E\n \u003C\/div\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\n\n\u003C\/p\u003E\n\n\u003Cp\u003E\n\u003C\/div\u003E\n\u003C\/p\u003E\n\n\u003Cp\u003EFarmers began as an insurance company providing coverage to farmers' vehicles. Since then it has evolved to become the seventh-largest insurance company in the country.\u003C\/p\u003E\n\n\u003Cp\u003EIt\u2019s hard to find an insurance company that offers more products than Farmers. It offers basic auto insurance, pet insurance and even investment products among a variety of other insurance products. Farmers employs nearly 13,000 people, underwriting more than 19 million policies across 50 states.\u003C\/p\u003E\n\n\u003Cp\u003E\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E","padding":"normal"}

8. Nationwide

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Nationwide is below average for affordability, and its customer reviews tend to veer negative. Nationwide offers standard coverages and discounts you’d expect from a large national insurer.

  • Average six-month premium: $466
  • Market share: 3%
  • Premiums written: $6.6 bn
  • ValuePenguin editor's rating: 3.5/5
  • J.D. Power customer satisfaction score: 876
  • Read our full Nationwide review

Nationwide does business across several verticals — including financial services, commercial lines and personal lines — in all 50 U.S. states. Nationwide has contributed more than $430 million to nonprofit organizations since 2000.

Nationwide has a motto called "On Your Side" that influences how auto insurance claims are handled, and how policies and premiums are determined. The company also recommends getting an annual checkup to ensure policyholders understand their benefits and declarations, as well as new discounts or changes to keep premiums steady and coverage adequate. Nationwide calls this consultation its "On Your Side" Review.

Among this list of the largest car insurance companies, Nationwide offers the best deals for customers looking to bundle their home and auto insurance policies.

LEARN MORE: Best Car Insurance Companies for Bundling Home and Auto Insurance

{"backgroundColor":"white","content":"\u003C\/p\u003E\n\n\u003Ch2 id=\"nationwide\"\u003E8. Nationwide\u003C\/h2\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"full pad-none align-left clearfix\"\u003E\n\u003Cdiv class=\"third pad align-left clearfix\"\u003E\n\u003Cdiv class=\"ReactComponent--root\"\u003E\n \u003Cdiv class=\"js-react-component-rendered js-react-component-AffiliateBanner\" data-component-name=\"AffiliateBanner\"\u003E\n \u003Cdiv class=\"AffiliateTileBanner--root AffiliateTileBanner--align-center \"\u003E\u003Cdiv class=\"AffiliateTileBanner--inner\"\u003E\u003Cdiv class=\"AffiliateTileBanner--wrapper\"\u003E\u003Cdiv class=\"AffiliateTileBanner--image\"\u003E\u003Ca class=\"Link--root AffiliateTileBanner--image-link \" href=\"https:\/\/insurance.mediaalpha.com\/zero-click.html?cu=https:\/\/www.nationwide.com\/&carrier=Nationwide;TKzt2XWu22mNOdQNJ2a4RzoV6BRPpNDUopJCfh7rAsgYilC61MaFepVn5p1L6_mIOJTZIazfFd3kcRBYBf9NIndYo-7WqA\" rel=\"nofollow\" target=\"_blank\" title=\"Nationwide\"\u003E\u003Cimg alt=\"Nationwide\" class=\"Image--root lazyload\" data-src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/nationwide-4\" data-srcset=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/nationwide-4 1x, \/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/referral_logos\/us\/insurance\/nationwide-4 2x\" src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/e_blur:1000,q_1,f_auto\/referral_logos\/us\/insurance\/nationwide-4\"\/\u003E\u003C\/a\u003E\u003C\/div\u003E\u003Cdiv class=\"AffiliateTileBanner--button\"\u003E\u003Cdiv class=\"AffiliateButtonV2--root \"\u003E\u003Ca class=\"Link--root Button--root Button--primary Button--fluid Button--square \" href=\"https:\/\/insurance.mediaalpha.com\/zero-click.html?cu=https:\/\/www.nationwide.mediaalpha.com\\\/zero-click.html?cu=https:\\\/\\\/www.nationwide.com\\\/&carrier=Nationwide;TKzt2XWu22mNOdQNJ2a4RzoV6BRPpNDUopJCfh7rAsgYilC61MaFepVn5p1L6_mIOJTZIazfFd3kcRBYBf9NIndYo-7WqA\",\"name\":\"Nationwide\"}\u003C\/div\u003E\n\u003C\/div\u003E\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"twothird pad align-left clearfix\"\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodePullquote--root\"\u003E\n \u003Cp class=\"ShortcodePullquote--text ShortcodePullquote--blue\"\u003E\n Nationwide is below average for affordability, and its customer reviews tend to veer negative. Nationwide offers standard coverages and discounts you\u2019d expect from a large national insurer. 6 bn\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EValuePenguin editor's rating\u003C\/strong\u003E: 3.5\/5\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EJ.D. Power customer satisfaction score\u003C\/strong\u003E: 876\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cspan\u003E\u003Ca class=\"ShortcodeLink--root ShortcodeLink--white\" title=\"Read our full Nationwide review\" href=\"https:\/\/www.valuepenguin.com\/nationwide-insurance-review\"\u003ERead our full Nationwide review\u003C\/a\u003E\u003C\/span\u003E\n \u003C\/li\u003E\n \u003C\/ul\u003E\n \u003C\/div\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\n\n\u003C\/p\u003E\n\n\u003Cp\u003E\n\u003C\/div\u003E\n\u003C\/p\u003E\n\n\u003Cp\u003ENationwide does business across several verticals \u2014 including financial services, commercial lines and personal lines \u2014 in all 50 U.S. states. Nationwide has contributed more than $430 million to nonprofit organizations since 2000.\u003C\/p\u003E\n\n\u003Cp\u003ENationwide has a motto called \"On Your Side\" that influences how auto insurance claims are handled, and how policies and premiums are determined. The company also recommends getting an annual checkup to ensure policyholders understand their benefits and declarations, as well as new discounts or changes to keep premiums steady and coverage adequate. Nationwide calls this consultation its \"On Your Side\" Review.\u003C\/p\u003E\n\n\u003Cp\u003EAmong this list of the largest car insurance companies, Nationwide offers the best deals for customers looking to bundle their home and auto insurance policies.\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cstrong\u003ELEARN MORE\u003C\/strong\u003E: \u003Cspan\u003E\u003Ca class=\"ShortcodeLink--root ShortcodeLink--black\" title=\"Best Car Insurance Companies for Bundling Home and Auto Insurance\" href=\"https:\/\/www.valuepenguin.com\/best-home-car-insurance-bundle\"\u003EBest Car Insurance Companies for Bundling Home and Auto Insurance\u003C\/a\u003E\u003C\/span\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E","padding":"normal"}

9. American Family

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American Family is a solid choice for auto insurance. The company offers decent rates, which have the potential to be great when policyholders utilize some of its many discounts.

  • Average six-month premium: $387
  • Market share: 2%
  • Premiums written: $5.8 bn
  • ValuePenguin editor's rating: 4/5
  • J.D. Power customer satisfaction score: 862
  • Read our full American Family review

American Family was established with the initial goal of insuring farmers. In the 1930s, the company expanded and began to focus on insuring non-farmers as well. Today, the company is one of the biggest insurance companies in the U.S., and the largest insurer by market share in the state of Wisconsin.

The company is known for its extensive discount catalogue that can make its already decent rates even more affordable for customers. However, American Family currently underwrites policies in just 17 states.

{"backgroundColor":"white","content":"\u003C\/p\u003E\n\n\u003Ch2 id=\"american-family\"\u003E9. American Family\u003C\/h2\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"full pad-none align-left clearfix\"\u003E\n\u003Cdiv class=\"third pad align-left clearfix\"\u003E\n\u003Cdiv class=\"ReactComponent--root\"\u003E\n \u003Cdiv class=\"js-react-component-rendered js-react-component-AffiliateBanner\" data-component-name=\"AffiliateBanner\"\u003E\n \u003Cdiv class=\"AffiliateTileBanner--root AffiliateTileBanner--align-center \"\u003E\u003Cdiv class=\"AffiliateTileBanner--inner\"\u003E\u003Cdiv class=\"AffiliateTileBanner--wrapper\"\u003E\u003Cdiv class=\"AffiliateTileBanner--image\"\u003E\u003Ca class=\"Link--root AffiliateTileBanner--image-link \" href=\"https:\/\/insurance.mediaalpha.com\/zero-click.html?cu=https:\/\/www.amfam.com\/&carrier=American%20Family;TKzt2XWu22mNOdQNJ2a4RzoV6BRPpNDUopJCfh7rAsgYilC61MaFepVn5p1L6_mIOJTZIazfFd3kcRBYBf9NIndYo-7WqA\" rel=\"nofollow\" target=\"_blank\" title=\"American Family\"\u003E\u003Cimg alt=\"American Family\" class=\"Image--root lazyload\" data-src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/amerfam-1\" data-srcset=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_1.0,f_auto,q_auto\/referral_logos\/us\/insurance\/amerfam-1 1x, \/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/referral_logos\/us\/insurance\/amerfam-1 2x\" src=\"\/\/res.cloudinary.com\/value-penguin\/image\/upload\/dpr_2.0,f_auto,q_auto\/e_blur:1000,q_1,f_auto\/referral_logos\/us\/insurance\/amerfam-1\"\/\u003E\u003C\/a\u003E\u003C\/div\u003E\u003Cdiv class=\"AffiliateTileBanner--button\"\u003E\u003Cdiv class=\"AffiliateButtonV2--root \"\u003E\u003Ca class=\"Link--root Button--root Button--primary Button--fluid Button--square \" href=\"https:\/\/insurance.mediaalpha.com\/zero-click.html?cu=https:\/\/www.amfam.mediaalpha.com\\\/zero-click.html?cu=https:\\\/\\\/www.amfam.com\\\/&carrier=American%20Family;TKzt2XWu22mNOdQNJ2a4RzoV6BRPpNDUopJCfh7rAsgYilC61MaFepVn5p1L6_mIOJTZIazfFd3kcRBYBf9NIndYo-7WqA\",\"name\":\"American Family\"}\u003C\/div\u003E\n\u003C\/div\u003E\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"twothird pad align-left clearfix\"\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodePullquote--root\"\u003E\n \u003Cp class=\"ShortcodePullquote--text ShortcodePullquote--blue\"\u003E\n American Family is a solid choice for auto insurance. The company offers decent rates, which have the potential to be great when policyholders utilize some of its many discounts. 8 bn\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EValuePenguin editor's rating\u003C\/strong\u003E: 4\/5\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EJ.D. Power customer satisfaction score\u003C\/strong\u003E: 862\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cspan\u003E\u003Ca class=\"ShortcodeLink--root ShortcodeLink--white\" title=\"Read our full American Family review\" href=\"https:\/\/www.valuepenguin.com\/american-family-insurance-review\"\u003ERead our full American Family review\u003C\/a\u003E\u003C\/span\u003E\n \u003C\/li\u003E\n \u003C\/ul\u003E\n \u003C\/div\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\n\n\u003C\/p\u003E\n\n\u003Cp\u003E\n\u003C\/div\u003E\n\u003C\/p\u003E\n\n\u003Cp\u003EAmerican Family was established with the initial goal of insuring farmers. In the 1930s, the company expanded and began to focus on insuring non-farmers as well. Today, the company is one of the biggest insurance companies in the U.S., and the largest insurer by market share in the state of Wisconsin.\u003C\/p\u003E\n\n\u003Cp\u003EThe company is known for its extensive discount catalogue that can make its already decent rates even more affordable for customers. However, American Family currently underwrites policies in just 17 states.\u003C\/p\u003E\n\n\u003Cp\u003E\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E","padding":"normal"}

10. Travelers

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Moderate complaint ratings and a variety of discounts make Travelers a good choice for auto insurance coverage.

  • Average six-month premium: $623
  • Market share: 2%
  • Premiums written: $5.5 bn
  • ValuePenguin editor's rating: 3.5/5
  • J.D. Power customer satisfaction score: 861
  • Read our full Travelers review

Travelers is more than 160 years old, making it one of the oldest insurance companies operating today. In fact, Travelers issued its first auto insurance policy in 1897, before the Ford Model T was invented.

The company has more than 30,000 employees and 13,500 independent agents and brokers in multiple countries — including the United States, Canada and Brazil.

Notably, Travelers offers a rate pricing program known as IntelliDrive, which determines your rates by assessing your safe driving behavior via a smartphone app. Enrolling in IntelliDrive can potentially reduce your annual insurance rates by as much as 20% if you exhibit good driving habits.

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List of the largest car insurance companies by state

State Farm is the largest insurer in our list, taking the top spot in 33 states and the District of Columbia. After State Farm, Geico was most frequently the largest insurer, taking the biggest market share in 10 states. Progressive was the largest car insurance carrier in seven states, and MAPFRE in just one.

To learn more about the largest car insurance companies in your state, click on the relevant link in the list below.

Largest auto insurance companies in each state

Big vs. small insurance companies

The trade-off between large insurance companies and small ones typically involves giving up competitive rates for an improved customer experience.

  • When using a small insurance company for your auto insurance, you'll likely communicate exclusively with one insurance agent.
  • While you might lose a personal connection when selecting a major insurer, the largest companies tend to have more financial stability. In fact, these carriers underwrite and pay out billions of dollars per year, and still often leverage their resources to offer drivers lower insurance rates.

You may also need to worry about solvency if you choose a policy from a smaller company due to lack of financial strength. If you manage to find a small insurer with a base level of financial stability that you're comfortable with, consider how much you're willing to pay for better service. If you value great service, you might prefer a small insurance company.

Below, we compared the 10 largest auto insurance companies according to their financial strength rating by AM Best.

A++/SuperiorState Farm, Geico, USAA
A+/SuperiorProgressive, Allstate, Nationwide
A/ExcellentLiberty Mutual, Farmers, Travelers, American Family

Another consideration is availability, coverage options and discounts. While you're likely to have a more personalized experience with a small insurance company, it may not have the availability, benefits and discounts that large insurance companies do. And the major or biggest insurance companies often have representatives that are still available to speak with policyholders 24/7.

Mutual vs. stock insurance companies

The main difference between mutual and stock insurance companies is the ownership configuration — stock insurance companies are privately- or publicly-owned companies that offer voting rights to stockholders. Mutual insurance companies, however, are owned by their policyholders.

Since stockholders benefit from the stock's appreciation, people argue that the short-term interests of investors don't always align with the long-term interest of the company. Many feel that mutual insurance companies are better because the policyholders' interests align well with what's best for the company, specifically lowering insurance rates and paying out dividends to attract more customers.

Below, we list the top 10 largest auto insurance companies by type, excluding USAA, which is an insurance exchange for military personnel.

State FarmGeico
Liberty MutualAllstate
American FamilyProgressive
NationwideFarmers
Travelers

Choosing the right insurer for you

Among all the large auto insurance companies out there, it's still important to pick a carrier that's best for your unique situation. We always recommend comparing quotes from multiple insurers in order to find cheap rates that fit your personal driver profile and history.

The type of auto insurance policy you choose — whether minimum or full coverage — will affect your quote, so it helps to have a general idea of which coverages you'd like before getting one.

  • Minimum-coverage car insurance is specified by the minimum auto insurance requirements in your state.
  • Full-coverage car insurance adds comprehensive and collision coverage to your policy in order to protect you against physical damage to your vehicle.

We typically suggest all drivers consider purchasing full-coverage car insurance, particularly if their vehicle is worth more than $3,000.

A quick and simple way to compare multiple car insurance quotes is to use our tool. You can start by entering your ZIP code below.

ValuePenguin works with trusted national carriers to help you find your best rate quickly, simply and easily — for free.

As an alternative, many insurers offer their own free online quote tools you can access directly through their websites, or you might consider working with an insurance agent to help you with the process.

Expert Insights to Help You Make Smarter Financial Decisions

ValuePenguin has curated an exclusive panel of professionals, spanning various areas of expertise, to help dissect difficult subjects and empower you to make smarter financial decisions. Read on for more auto insurance insights. 

  1. Flo from Progressive and Jake from State Farm are household names by now. How does the perceived value of larger companies impact the smaller, yet potentially just as competitive, ones?
  2. How does market share ownership impact a customer's perception of quality of service?
  3. Generally speaking, what is the impact on customer satisfaction after an acquisition and/or consolidation?
  4. Living in this digital revolution, is it necessary for companies, like insurance providers, to maintain localized agents and personalized experiences?

The commentary provided by these industry experts represent their viewpoints and opinions alone.

{"backgroundColor":"white","content":"\u003C\/p\u003E\n\n\u003Cp\u003EValuePenguin has curated an exclusive panel of professionals, spanning various areas of expertise, to help dissect difficult subjects and empower you to make smarter financial decisions. Read on for more auto insurance insights.\u00a0\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodeList--root\"\u003E\n\n \u003Cdiv class=\"ShortcodeList--content ShortcodeList--content-margin\"\u003E\n \u003Cdiv class=\"ShortcodeList--column\"\u003E\n \u003Col class=\"ListOrdered--root\"\u003E\n \u003Cli class=\"ListOrdered--list-item\"\u003EFlo from Progressive and Jake from State Farm are household names by now. 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Marlett, PhD, CPCU\u003C\/strong\u003E\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n Managing Director, Brantley Risk and Insurance Center\n \u003C\/li\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cspan\u003E\u003Ca class=\"ShortcodeLink--root ShortcodeLink--black\" title=\"Read Answer\" href=\"#expert-david-c-marlett\"\u003ERead Answer\u003C\/a\u003E\u003C\/span\u003E\n \u003C\/li\u003E\n \u003C\/ul\u003E\n \u003C\/div\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\n\n\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"third pad-half align-left clearfix\"\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodeImage--root left\" \u003E\n \u003Cdiv class=\"ShortcodeImage--image-container \"\u003E\n \u003Cimg alt=\"headshot of expert\" class=\"ShortcodeImage--image lazyload\" style=\"width: 80px;\" data-src=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/dena-hale_fnkdy0\" src=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,e_blur:1000,f_auto,h_1600,q_1,w_80\/v1\/dena-hale_fnkdy0\" data-srcset=\"http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_80\/v1\/dena-hale_fnkdy0 1x, http:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,f_auto,h_1600,q_auto,w_80\/v1\/dena-hale_fnkdy0 2x\"\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\"ShortcodeList--root \"\u003E\n\n \u003Cdiv class=\"ShortcodeList--content\"\u003E\n \u003Cdiv class=\"ShortcodeList--column\"\u003E\n \u003Cul class=\"ListUnordered--root ListUnordered--plain\"\u003E\n \u003Cli class=\"ListUnordered--list-item\"\u003E\n \u003Cstrong\u003EDr. Dena H. 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headshot of expert

Deanne Butchey, PhD

Teaching Professor, Finance; Faculty Advisor, Phoenician Investment Fund (PIF); Financial Management Association (FMA) @ FIU

Flo from Progressive and Jake from State Farm are household names by now. How does the perceived value of larger companies impact the smaller, yet potentially just as competitive, ones?

It depends on the industry. In financial services, trust and the ability to connect with the company is critical in instilling confidence in the minds of the consumers. Smaller companies that do not have an easily identifiable spokesperson may not enjoy as widespread acceptance or trust. Eventually, word of mouth and personalized experiences with the smaller company may ease these concerns.

How does market share ownership impact a customer's perception of quality of service?

In scientific research, it is a known fact that a small percentage of influencers who may be viewed as "informed individuals" have the potential to lead others down a specific path. Many times when a company has a significant market share, consumers believe that existing clientele have superior information about the quality of the good or service. It is for this reason that positive online reviews are highly sought after.

Generally speaking, what is the impact on customer satisfaction after an acquisition and/or consolidation?

It depends how effectively the integration or consolidation takes place. If it is seamless and customers view the expansion of services offered as being beneficial to them, they will be highly satisfied. On the other hand, if there are hiccups or disruptions in service in the early stages of integration, the acquired or consolidated company will lose its original customers.

Living in this digital revolution, is it necessary for companies, like insurance providers, to maintain localized agents and personalized experiences?

I don’t believe it is necessary to maintain local agents, but it is important that the person on the other line or on the chat is culturally sensitive. Seemingly personalized experiences, whether it is through a live agent or artificial intelligence is invaluable.

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headshot of expert

Dr. Craig Seidelson

Assistant Professor Operations and Supply Chain Management, University of Indianapolis

Flo from Progressive and Jake from State Farm are household names by now. How does the perceived value of larger companies impact the smaller, yet potentially just as competitive, ones?

Companies in the U.S. spent nearly $250 billion on ads in 2020. When it comes to financing national marketing campaigns, large companies have a distinct advantage over their smaller counterparts. This spending advantage becomes a business advantage when ads create sufficient brand loyalty that consumers are willing to pay a price premium for more recognizable products and services.

How should drivers balance risk management and affordability when it comes to car insurance?

It's widely accepted among consumers that market share is a key indicator of competitiveness. It follows that companies with a commanding market share are perceived as offering superior products or services. Consumers are willing to pay more for perceived value. With higher profits comes opportunities to further expand market share. As the cycle repeats, the connection between market share and perceived quality is reinforced.

Living in this digital revolution, is it necessary for companies, like insurance providers, to maintain localized agents and personalized experiences?

In our digital world, U.S. consumers spent a whopping $860 billion online in 2020. Is it still necessary for companies to offer personalized sales staff? On the one hand, consumers clearly value the safety, convenience, low prices and wide selection available online. This is particularly true when amounts being spent are well within one's discretionary budget. On the other hand, over half of online shoppers spend less than 15 seconds on a website. When purchases are for substantial amounts of money, selling requires much more engagement than a typical website can offer. Salespeople have the skills necessary to help would-be buyers with their purchase decisions.

Источник: https://www.valuepenguin.com/largest-auto-insurance-companies

National Flood Insurance Program FAQs

The National Flood Insurance Program (NFIP) is administered by the Federal Emergency Management Agency (FEMA) and is a Federal program enabling property owners in participating communities to purchase insurance as a protection against flood losses.  In exchange, participating communities agree to adopt and enforce ordinances that meet or exceed FEMA requirements to reduce the risk of flooding.

FEMA works very closely with nearly 87 private insurance companies who participate in the Write Your Own (WYO) Program to write and service Federal flood insurance in their own names.  The WYO companies operate within the context of the NFIP and are subject to its rules and regulations with oversight by FEMA.

Doesn’t standard homeowner’s insurance policy cover flood damages?

No. Only flood insurance financially covers your home and your personal property from floods. An NFIP Standard Flood Insurance Policy (SFIP) compensates homeowners, renters, and business owners for all covered losses, and unlike a Federal disaster loan, it does not have to be repaid.
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What role do New Jersey insurance companies have in the NFIP?

New Jersey insurance companies write and service Federal flood insurance, on behalf of the NFIP. FEMA maintains oversight of the so called Write Your Owns (WYOs), ensuring they are adhering to all the NFIP rules and regulations. The WYOs are not subject to regulation by the State of New Jersey with respect to the NFIP. However, FEMA encourages the WYO companies to cooperate with the State insurance commissioners and regulators to provide assistance in responding to general flood insurance inquiries related to claims and claims handling activities.
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What about other storm related damages, such as wind damage to my home or a tree falling on my car?

Those are covered by homeowner’s insurance (HO) policies which are sold by New Jersey insurance carriers such as New Jersey Manufacturers, AllState, State Farm and Chubb, which are regulated by the New Jersey Department of Banking and Insurance.
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How many Sandy-related flood insurance claims has NFIP closed to date?

As of March 11, 2013, the NFIP had closed about 55,865 claims, or 75 percent of all flood claims filed in New Jersey.
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How does that compare to the number of homeowner’s claims and other non-flood claims closed?

As of March 1, 2013, 93 percent of homeowner’s insurance claims had been closed; 88 percent of personal auto; 77 percent of commercial property and 78 percent of commercial auto, for an overall total of 90 percent of non-flood claims that have been closed.
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What are some of the common reasons why claims remain open?

Cases may remain open for many reasons including lenders who are co-recipients of insurance claims, and are managing disbursements of funds; a top concern of consumers calling the Department of Banking and Insurance (DOBI) is unsatisfactory settlement offers. Business-related claims such as commercial property, commercial auto and business interruption are generally closed at a slower pace than personal claims for a variety of reasons including that the issues tend to be more complex, policy-specific and require a longer investigation.
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What are some of the things that the Department of Banking and Insurance (DOBI) does to assist consumers when they call for help with their claims?

Staff at the Department’s Consumer Inquiry and Response Center (CIRC) assists consumers by answering any banking and insurance related questions regarding their case. Depending on the circumstances, a Department investigator will then contact the policyholder’s insurance company or bank to try and resolve any outstanding issues in order to settle the claim. If a consumer files a formal complaint, staff from the Office of Consumer Protection will investigate to determine if any state laws or statutes relating to banking and insurance have been violated. Violations are referred to the Department’s Enforcement Unit for possible administrative action. If the case in question involves a company not licensed by the Department or a program not regulated by the state such as the NFIP, the Department will still contact the parties involved and act as advocates for New Jersey consumers.

Department staff, accompanied by representatives of the NFIP and the Governor’s Office, has hosted 15 “mobile offices” going to communities and answering consumers’ questions, assisting them with insurance claims and other insurance or banking issues. Additional mobile offices will be held to continue to helping communities with any other insurance or banking issues related to the storm.
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What is the Department doing to resolve the remaining claims?

The Department is starting a mediation program designed to settle open claims. The new program will allow property owners to submit homeowner’s automobile and commercial property claims to a mediator who will review the case and assist in settlement discussions. There will be no cost to the consumer. State regulated insurers are required to notify policy holders with open or unresolved cases that they can ask for a mediation conference and provide detailed instructions for filing that request. Mediation will prevent costly and time-consuming litigation for thousands of open Sandy cases. Faster case resolution will permit New Jerseyans to rebuild and recover from Sandy in a timelier manner.

The program will be operated by:
American Arbitration Association
E-mail: [email protected];
Facsimile: 877-307-8457;
Toll Free Phone Number: 855-366-9774;
Online: www.adr.org; or
Traditional Mail to: 1101 Laurel Oak Road, Suite 100, Voorhees, NJ 08043
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What should consumers do if they have a problem with a Sandy-related insurance claim?

Contact the Department at (609) 292-7272, Ext. 5, or online at www.dobi.nj.gov.
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I have not heard from my adjuster and my insurance company has not contacted me. What should I do?

Contact the claims examiner at your WYO Company by calling the toll-free number for claims and providing your name, policy number, and the date of loss.
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What is a Supplemental Claim?

Your flood insurance adjuster hired by your insurance carrier will submit a final report to your insurance carrier which will serve as your claim on your behalf. In the event the final report undervalues the covered cost to repair or replace your insured property, you may file a supplemental claim before this extended Proof of Loss filing period has expired.
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How do I file a supplemental claim?

If you need to file a supplemental claim, FEMA recommends you submit your request in writing to your insurance carrier directly and to copy the adjusting firm (or the adjuster) whom they hired. You should include with your letter all documents which support your request, including but not limited to paid receipts or invoices for repairs completed, itemized (room by room) contractor’s estimates, photographs, and if related to the foundation of your building, a written report from a licensed engineer.

Please allow your insurance carrier the time to review your request and to provide instructions to the adjuster. If it is determined a supplemental claim is payable your adjuster will send you a Proof of Loss claim form. A Proof of Loss claim form is a requirement in order to receive a supplemental claim payment. If your adjuster does not provide you the Proof of Loss claim form for the value you feel you deserve, you may complete and submit your own Proof of Loss claim form directly to your insurance carrier. If you have any questions or concerns please contact your flood insurance carrier.
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What is the deadline by which I have to file a Supplemental Claim?

Due to the impacts of flooding, FEMA has waived the Standard Flood Insurance Policy (SFIP) sixty-day “Proof of Loss” filing deadline, up to one full year from the date of your Sandy flood loss.
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What is an Appeal?

If you received a written letter of denial of your claim or any part of it from your WYO company, the NFIP provides you with a process to appeal decisions regarding your flood insurance claim. This process will help you resolve claim issues, but it cannot give you added coverage or claim limits beyond those in your NFIP policy.

For your convenience, please read the NFIP Flood Insurance Claims Handbook, which describes the formal appeals process, as well as, other important claims information.
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What is the deadline by which I have to appeal my claim?

If your building is damaged by a flood, you may be required to meet certain building requirements in your community to reduce future flood damage before you repair or rebuild.

The NFIP Standard Flood Insurance Policy SFIP) provides Increased Cost of Compliance (ICC) coverage of up to $30,000, which may be available to help cover the costs of meeting those requirements, subject to eligibility.

For more information on how to file an ICC claim, please read Increased Cost of Compliance: How You Can Benefit.
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I filed an ICC claim with my insurance company, but have not been advanced any partial payments to begin my mitigation project. Are insurance companies required to advance partial payments?

There is no requirement that WYO Companies advance partial payments.  However, the Federal Insurance Administrator has conditionallywaived the requirement that requires completion of ICC work before payment, authorizing partial advance payments up to 50% of the available ICC limit.  Please contact the WYO Company directly and refer to the WYO Bulletin w-13006.

For a copy of any WYO Bulletins, please visit www.nfipiservice.com.
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What if my house has foundation damage, but the adjuster did not include it on my claim?

A Supplemental Claim may be filed. See the guidance above for filing a supplemental claim. Additionally, if you have an engineer’s report, it should be provided it to the adjuster.
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How can my insurance company deny me in whole or part for my foundation due to “land subsidence” or “age”, when the damage was caused by flooding?

In accordance with the SFIP, Section V. Exclusions (C.):
C. We do not insure for loss to property caused directly by earth movement even if the earth movement is caused by flood. Some examples of earth movement that we do not cover are:
  1. Earthquake;
  2. Landslide;
  3. Land subsidence;
  4. Sinkholes;
  5. Destabilization or movement of land that results from accumulation of water in subsurface land area; or
  6. Gradual erosion.
    We do, however, pay for losses from mudflow and land subsidence as a result of erosion that are specifically covered under our definition of flood (see II.A.1.c. and II.A.2.).

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My adjuster advised me that if I don’t like the insurance estimate, I can appeal to FEMA. What are my options after an appeal?

An insured may only appeal to FEMA as described in the NFIP Flood Insurance Claims Handbook and only after a denial and only for those items denied.  If you are not happy with the insurance estimate, you should follow the supplemental claim/proof of loss explained above.
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What are some of the things that the department of Banking and Insurance does to assist consumers when they call for help with their claims?

Staff at the Department’s Consumer Inquiry and Response Center (CIRC) assists consumers by answering any banking and insurance related questions regarding their case. Depending on the circumstances, a Department investigator will then contact the policyholder’s insurance company or bank to try and resolve any outstanding issues in order to settle the claim. If a consumer files a formal complaint, staff from the Office of Consumer Protection will investigate to determine if any State laws or statutes relating to banking and insurance have been violated. Violations are referred to the Department’s Enforcement Unit for possible administrative action. If the case in question involves a company not licensed by the Department or a program not regulated by the state such as the NFIP, the Department will still contact the parties involved and act as advocates for New Jersey consumers.

Department staff, accompanied by representatives of the NFIP and the Governor’s Office, have hosted 15 “mobile offices” going to communities and answering consumers questions, assisting them with insurance claims and other insurance or banking issues. Additional mobile offices will be held to continue to helping communities with any other insurance or banking issues related to the storm.
top


What should consumers do if they have a problem with a Sandy-related insurance claim?

Contact the Department at (609) 292-7272, Ext. 5, or online at www.dobi.nj.gov.
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Источник: https://www.nj.gov/gorr/homeowners/insurance/nfip_faqs.html

Pros Explained

  • There is a wide range of life insurance options: With State Farm, you can choose between whole life, term life, and universal life policies. There are different coverage options and riders you can add, so you can customize your policy to meet your needs. 
  • You can convert your term life policy to permanent coverage: If you have a term life policy with State Farm, you can convert it to permanent coverage, regardless of your health status. 
  • No-exam insurance is available: If you don’t want to go through a medical exam—a typical requirement for most life insurance policies—State Farm’s Instant Answer Term Insurance allows you to get $50,000 in coverage without an exam. 

Cons Explained

  • You may not be able to get a quote online for all products: While State Farm does allow you to get quotes online for some life insurance policies, that feature isn’t available for all products in all states. Depending on where you live and what policy you are interested in, you may need to call an agent to get a quote. 
  • Final expense policies are capped at $10,000: State Farm’s final expense policies—which are intended to cover burial costs—are capped at $10,000. According to current data from the National Funeral Directors Association, the median cost of a funeral with viewing and burial is $7,848, but that doesn’t include expenses like cemetery, tombstone or marker costs, and flowers, which can add to the overall expense. A typical burial and memorial ceremony can quickly surpass the $10,000 maximum that State Farm offers. 
  • No-exam plans have age and benefit restrictions While no-exam policies are available, only people between the ages of 16 and 45 are eligible, and the benefits are capped at $50,000. If you need more coverage, you’ll need to apply for a different policy and undergo a medical exam. 

Available Plans

Whether you want a relatively inexpensive policy that just covers your final expenses or you want to ensure your family’s future is protected when you’re gone, State Farm has a range of life insurance options available. With 10 different life insurance plans to choose from, you can find a policy that meets your needs. 

Fast Fact

In 2021, State Farm wrote over $4.9 billion in direct life insurance premiums.

Term Life Insurance

With term life insurance, you get death protection for a fixed period of time. 

Term life policies can be a cost-effective option for most families. They’re especially popular for people with young children since term life gives you a safety net or can be used to pay off the home mortgage if you pass away. 

State Farm has three different term life insurance products: 

  1. Select Term: With Select Term Life Insurance, you can choose a 10-year, 20-year, or 30-year term. Coverage starts at $100,000, and your premium is level, meaning you won’t be surprised by increases. You can extend your coverage beyond the loan term until you reach the age of 95, but you will pay a higher premium. 
  2. Return of Premium Term: If you opt for a Return of Premium Term policy, you can choose an initial term of 20 or 30 years. If you pay all of your premiums and outlive the initial insurance term, the premiums will be returned to you at the end of the policy term. During your term, your premiums build cash value, which you can borrow against. 
  3. Instant Answer Term: With Instant Answer Term insurance, you can get $50,000 in death benefits without a medical exam. People between the ages of 16 and 45 are eligible to apply, and you are covered until age 50 or a maximum of 10 years, whichever is longer. 

State Farm’s life insurance policies are available in every state except Massachusetts. State Farm Life Accident Assurance Company handles policies in New York and Wisconsin.

Whole Life Insurance

If you have a whole life insurance policy, you have coverage for your entire lifetime. Whole life policies pay out a death benefit, but they also have a savings component that can accumulate cash value, which can be invested. Monthly premiums use a portion for insurance coverage and a portion for tax-deferred savings.

State Farm has four whole life insurance options: 

  1. Whole Life: Your premiums stay the same your entire life with Whole Life insurance, and you have a guarantee of lifetime coverage. 
  2. Limited Pay Whole Life: With a Limited Pay policy, you only pay premiums for 10, 15, or 20 years. Later on, you still have coverage, but you no longer have to worry about paying monthly premiums. 
  3. Single Premium Whole Life: If you opt for a Single Premium Whole Life policy, you only make one premium payment, and no additional payments are ever required. 
  4. Final Expense: With a Final Expense policy, you can receive $10,000 in coverage for your burial expenses. Premiums remain level and may be payable beyond age 100. 

Universal Life Insurance

Universal life insurance is a form of permanent life insurance. Universal life policies tend to have inexpensive premiums and they provide more flexibility than whole life policies. Policyholders can make changes to their policies, including their premiums and death benefits, and a universal life policy can accumulate cash value. 

State Farm has three universal life insurance options: 

  1. Universal Life: Universal Life policies are available to people between the ages of 0 and 85, and coverage starts at $25,000. You can lower or raise your coverage and your premiums to fit your changing life. You can choose to receive a death benefit equal to the basic amount of life insurance you chose, or you can opt to receive a death benefit that varies with your account value. 
  2. Survivorship Universal Life: Survivorship Universal Life covers two people and pays benefits only after both individuals have passed away. Coverage starts at $250,000. 
  3. Joint Universal Life: Two people can get coverage, often at a lower cost than purchasing two separate policies. With Joint Universal Life, the death benefit is paid to the beneficiaries upon the death of the first insured. Coverage starts at $100,000. 

Available Riders

An insurance rider, also known as an endorsement, is an amendment to an insurance policy that changes the terms of the existing policy. A rider can be added to a policy when you purchase it, mid-term, or when you renew your policy. Riders can be used to add covered individuals, add coverage, or modify existing coverage.

State Farm has a comprehensive list of available riders that you can add to your life insurance policies. 

Children’s Term Rider

You can add a children’s term rider to your policy to get temporary life insurance for your children until they turn 25 or until you turn 65. The rider can provide up to $20,000 in coverage for each eligible child in the family. Once your child turns 25, you can convert the rider to permanent insurance for up to five times the amount of coverage. Coverage ranges from $5,000 to $20,000. 

The children’s term rider can give you coverage in a worst-case scenario and allows you to add coverage when your child gets older. 

Flexible Care Benefit Rider

If you become chronically ill and need long-term care services, the flexible care benefit rider allows you to access a portion of your death benefit each month and waives monthly deductions. The maximum monthly benefit is 2% of the death benefit at the time of the claim. 

Guaranteed Insurability Option

You can purchase additional insurance at specific dates without a medical exam with the guaranteed insurability option rider. Option ages are 17, 22, 25, 28, 31, 34, 37, 40, 43, 46, and 49. Coverage ranges from $25,000 to $100,000. 

Level Term Rider/Additional Insured

With a level term rider, you can add an additional insured person to your policy. It provides term life insurance to age 95 for the amount of the rider. This rider is not available on policies that have a flexible care benefit rider. The minimum coverage is $25,000. 

Waiver of Monthly Deduction for Disability

If you become totally disabled for six consecutive months or more prior to age 60, this rider will waive future monthly deductions as long as you remain disabled. If you become disabled between the ages of 60 and 65, the rider will waive monthly deductions until the third anniversary after total disability or when you turn 65, whichever is later. 

Customer Service

State Farm has a number of options to get help with your insurance policies. For quotes and life insurance claims, you should contact a State Farm agent directly. Most agents are available during business hours via phone or email. 

If you have general questions about life insurance options and State Farm’s policies, you can call State Farm’s customer service line at 800-782-8332.

While State Farm doesn’t have an online chat feature, you can file a claim, manage your account, and make premium payments online. 

Complaint Index

The National Association of Insurance Commissioners (NAIC) maintains a database of consumer complaints about life insurance companies. Each year, the NAIC publishes companies’ complaint ratios, meaning the number of complaints it received adjusted for the companies’ market share. 

The NAIC considered scores above 1.0 to be worse than average, and scores below 1.0 to be better than average.

State Farm tends to perform well according to NAIC’s complaint index.

  • State Farm Life & Accident Assurance had a complaint ratio of 0.12 (fewer than average number of complaints)
  • State Farm Life Insurance Company had a complaint ratio of 0.24 (fewer than average number of complaints) 
Fast Fact

Over the past three years, State Farm has consistently had better-than-average complaint ratios.

Third-Party Ratings

AM Best is a credit ranking agency focused primarily on the insurance industry. It evaluates insurers’ financial strength, measuring companies’ ability to meet their policy obligations. 

The AM Best rating shows how financially stable an insurance company is. The higher the grade, the more financially stable it is. What this means to consumers is the company is likely to be able to pay their claim when the time arises.

AM Best granted State Farm Life Insurance Company and State Farm Life and Accident Assurance Company a Financial Strength Rating of A++ (Superior), its highest rating.

Cancellation Policy

If you’d like to cancel your policy, contact your State Farm insurance agent. Policy terms, policies, and fees can vary by state, so make sure you ask about cancellation fees and free look periods—the time you have to cancel a policy without penalties or surrender charges. 

Price

State Farm’s pricing is dependent on a range of factors, including your age, health history, and location. Pricing varies from person to person, so take into account whether you want a term life policy or a whole life or universal policy, how much coverage you want, and what riders you want to add to your policy, which can affect your costs. 

Like most life insurance companies, State Farm requires you to apply for insurance as either male or female based on your birth biology. Being nonbinary does not disqualify you from getting life insurance, nor does it mean you’ll pay higher rates. However, you may be restricted by current underwriting processes. 

Competition

Before applying for a life insurance policy, it’s wise to compare plans from different insurers. 

While State Farm is a well-known company, New York Life is a popular choice for life insurance. In fact, it's the third-largest individual life insurance company in the United States based on direct premiums written.

Like State Farm, New York Life has 10 different plan options to choose from and has an A++ rating from AM Best.

State Farm LifeNew York Life
Market ShareSeventh largest in U.S., 3.5%Third largest in U.S., 6.0%
Number of Plans1010
Dividends for 2020$600 million$1.9 billion
Wellness Program Discounts/Quit Smoking IncentivesNot applicableNot applicable
Service MethodAgentsAgents
AM Best RatingA++ (Superior)A++ (Superior)
Price RankBetter than mostBetter than most
Complaints Trend0.24 Excellent0.22 Excellent

While both are excellent insurance companies, New York Life edges out State Farm as the better choice. It has more product lines than State Farm, including insurance riders that cover chronic care, critical illnesses, and living benefits. New York Life also has stellar customer service. Unlike State Farm, which only has insurance agents, New York Life connects you with financial professionals to come up with a strategy and select the best insurance policies for your needs. It's a more personalized approach to life insurance that gives New York Life the advantage over State Farm.

Verdict

If you are looking for a life insurance policy, State Farm is an excellent choice. With a range of life insurance plans to choose from, multiple payment options, and riders you can add to customize your policy, you can design a life insurance policy to fit your family’s unique needs. State Farm has a strong reputation and has an A++ rating from AM Best, the highest possible rating, so you can have confidence that your policy will be honored.

Methodology

Our reviews of life insurance companies are based on a quantitative approach that analyzes each insurer on their stability and reliability, customer service, claims experience, diversity of product lines, and cost. We compare the terms of each type of policy offered—including available coverage amounts, optional riders, and premium payment options—with that of other major life insurance companies. Lastly, we look at how the company is rated by third-party organizations to determine its reliability and overall reputation. Read our full life insurance review methodology

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy .

  1. National Funeral Directors Association. "Statistics." Accessed Nov. 17, 2021.

  2. Insurance Information Institute. "Facts and Statistics: Life Insurance." Accessed Nov. 17, 2021.

  3. National Association of Insurance Commissioners. "What Is an Insurance Endorsement or Rider?" Accessed Nov. 17, 2021.

  4. National Association of Insurance Commissioners. "Consumer Insurance Search Results-State Farm Life." Accessed Nov. 17, 2021.

  5. AM Best. "AM Best Affirms Credit Ratings of State Farm Mutual Automobile Insurance Company and Most of Its Subsidiaries." Accessed Nov. 17, 2021.

  6. AM Best “New York Life Insurance Company - Company Profile - Best’s Credit Rating Center." Accessed Nov. 17, 2021. 

Источник: https://www.investopedia.com/state-farm-life-insurance-review-5072604