Michael Tipsord is retiring as State Farm’s CEO after holding the position for nearly a decade, according to a State Farm news release. 

Jon Farney, the company’s current president, has been selected to step into the CEO position on June 1. Tipsord will remain as State Farm’s chairman. 

“Jon and I have worked together for many years,” Tipsord said in the release. “I’ve seen how much he cares about State Farm, how much he cares about the people at State Farm, how he solves problems, and how focused he is on taking care of our customers.” 

Jon Farney/State Farm

Tipsord started with State Farm in 1988, becoming vice chairman and CFO in 2004. He advanced to COO in 2011 and CEO in 2015. He was elected chairman in 2016. 

The release says State Farm has grown from 83 million to 94 million policies under Tipsord. 

“It’s a privilege to follow Michael as CEO of this great company and lead an incredible team of more than 19,000 independent contractor agents and 65,000 employees who are committed every day to serving our customers,” said Farney in the release. “We’ll push ourselves to continually improve so we’re positioned to help even more people manage the risks of everyday life, recover from the unexpected and realize their dreams.”

Farney joined State Farm in 1993 and was named senior vice president, treasurer, and CFO in 2016. He became the president of State Farm Mutual Automobile Insurance Co. in 2024. 

A 2023 article from Insurance Business Magazine, found Tipsord to be the highest-paid personal line insurance CEO with a $24.4 million compensation in 2022. Travelers CEO, Allan Schnitzer, followed with $20.8 million in compensation, and Allstate’s Tom Wilson was third on the list with $18.9 million. 

The double-digit millionaire CEOs continue to lead their companies’ plans for increasing insurance premiums in the double-digits. The increases impact consumers who had a median weekly earning of $1,145 in Q4 2023, according to the U.S. Bureau of Labor Statistics. 

A recent report from Yahoo Finance found auto insurance is increasing 20.6% year over year as of February. It states the increase is the largest hike in insurance costs ever recorded in government data that starts in 1985. 

The report also found auto insurance to have the highest increase for February out of 28 categories the news agency has been tracking since 2021. Rent followed auto insurance’s 20.6% increase with an increase of 5.8%. Ten items on the list have started decreasing costs, such as used vehicles, which had a 1.8% decrease. 

Federal Reserve Chair Jerome Powell mentioned the cost of insurance on inflation during testimony to the Senate Banking, Housing, and Urban Affairs Committee March 7. 

Powell said inflation, overall, is moving closer to a 2% target as the economy starts to balance, such as supply and demand issues. He said if the economy continues to broaden, as expected, it is likely the Federal Reserve will relax policy restraints including lowering interest rates. 

State Farm reported a $3.5 billion increase in net worth for 2023. It reports $725 million in dividends to policyholders and issued a record $118 billion in new policy volume.

Its property and casualty (P&C) group of companies had an underwriting loss of $14.1 billion for 2023, compared to a $13.2 billion loss in 2022, according to a company press release.

State Farm says the company witnessed an improvement in auto lines’ underwriting results, but homeowner-incurred catastrophe claims offset it. Auto insurance represents 64% of State Farm’s P&C companies.

State Farm vaguely mentioned it would take a “state-specific” approach to improve auto line profitability. 

The Wall Street Journal recently reported on insurers seeing stock jumps as they report annual profits after years of raising premium rates. 

Insurers claim pandemic losses from part delays, rising labor costs, and used car values are why they’ve hiked rates in recent years. The rate hikes continually receive criticism from consumer advocacy groups who’ve claimed insurers are overstating needs and overburdening the consumer. 

As insurers raise premiums, collision repair shops have simultaneously noted an increase in consumer responsibility for out-of-pocket expenses due to short payments. 

Insurers also remained one of the top industries spending on lobbying in 2023. It only trailed behind the pharmaceutical and electronics manufacturing industries, according to data released by Statista.

As an industry, insurance companies spent $157 million lobbying, pharmaceutical companies spent $378 million and electronic manufacturers spent $239 million.

Within the insurance market, those focused on healthcare spent the most in 2023 with Blue Cross/Blue Shield, America’s Health Insurance Plans, Cigna Corp and AFLAC Inc. topping the list, according to opensecrets.org.

American Property Casualty Insurance Association ranked fifth with $6 million spent on lobbying in 2023. USAA followed with $4 million spent.

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Featured photo: State Farm CEO Michael Tipsord (Courtesy of State Farm)