Homegrown insurance.

• Author: Beck, Bill
• Position: Many insurance companies in the US find their home in Indiana - Includes related article - Industry Overview

Why is Indiana home to so many insurance companies?

Indiana is a great place to be located, especially if you're in the insurance business. Industry giants like American United Life in Indianapolis and Lincoln National Corp. in Fort Wayne call the Hoosier state home. Golden Rule Insurance, the nation's largest writer of individual major-medical insurance, is headquartered in Indianapolis. The Associated Group, the Indianapolis-based parent company of the Indiana Blue Cross/Blue Shield plan, occupies one of the fastest-growing niches in the insurance business nationwide.

All told, some 180 life, health and property/casualty insurance--known in the business as P&C--companies have home addresses in Indiana. They range from giants like Lincoln National to smaller specialty insurance companies like Forethought--a Batesville subsidiary of Hillenbrand Industries that offers pre-planned burial insurance through funeral directors--and Brotherhood Mutual, a Fort Wayne firm that got its start back in 1917 as a mutual aid society for members of the Mennonite Church in Indiana.

In many ways, Indiana's attraction to insurance companies is out of all proportion to the state's size. The 54 life insurance companies domiciled in Indiana are only two less than the 56 companies headquartered in California, a state several times larger in area and population. Indiana's 126 P&C companies outnumber the 96 P&C companies headquartered in Florida, and are double the 63 P&C companies headquartered in New Jersey.

Industry observers point to a number of factors, both historical and current, that contribute to the Hoosier state's reputation as a good place to do business, especially for the insurance business. The state's agrarian background has fostered a citizenry with common sense, and that in turn has led to a pro-business attitude. Insurance company executives give the state's insurance commission high marks for fairness, and they point out that the state legislature can usually be counted upon to pass reasonable legislation. Finally, Indiana's court system has a reputation for impartial judgments that the judiciary in other states don't always live up to.

"Indiana is balanced," says Paul Steiner, president and chairman of Brotherhood Mutual Insurance Co. in Fort Wayne. "That doesn't mean it's perfect, but there is a balance between regulation and the judicial court system. And the legislature here sees the need to be balanced."

Steiner cites a 1991 regulatory survey of the property-casualty industry by Conning and Co. to back up his contention. The survey ranked the 50 state insurance departments and reported that Indiana's insurance department gave companies under its jurisdiction a high level of freedom to manage their own affairs. The state's department was ranked third for personal lines and fifth for commercial lines.

Other states with a similar Midwestern background--Iowa and Illinois--also ranked high, while California, Texas and Louisiana came in at the bottom of the list.

Just because it's given high marks doesn't mean insurance regulation in Indiana is a pushover. "Indiana's regulatory climate is definitely in the top 10, the top 15," says Gene Grabowski, an analyst with the American Council of Life Insurance in Washington, D.C. "But it's not an easy place to do business. The insurance department is firm but...