State Farm Insurance Claims "No Fault" in Bankrolling ALEC

Despite calls from Color of Change, the Center for Media and Democracy and other public interest groups to cut ties with the American Legislative Exchange Council (ALEC), State Farm Insurance, the nation's largest auto insurer and a major insurer of homes, has maintained both membership and leadership in the organization. Why would a Fortune #37 company that specializes in making a profit off of risk algorithms take the risk of alienating many of its own customers?

Screenshot of Brochure"(O)ur work with ALEC is limited to research projects for use by public officials considering matters that impact the affordability and accessibility of insurance," a State Farm vice president wrote to Wisconsin insurance holder Samuel Hokin in response to concerns raised about ALEC last year. "Even when we disagree, we engage," wrote corporate VP Louise Perrin.

In recent weeks, as the controversy over ALEC's agenda has increased, some have asked, "State Farm is Where?," taking a page from the ad campaign with the slogan, "State Farm is There." Citizens have also questioned whether State Farm is really "Like a Good Neighbor" when its funding for ALEC's operations has helped underwrite ALEC's support for the expansion of gun laws. Since 2005, ALEC has advanced as a model the law in Florida known as the "Castle Doctrine" or "Stand Your Ground," "Shoot First" or even "Kill at Will." That law had been cited as the basis for several weeks for not arresting George Zimmerman, who shot and killed his new neighbor, the unarmed Florida high school student Trayvon Martin. The Wisconsin policy holder had written State Farm that by supporting ALEC, it was supporting an "anti-democratic organization that is bent on destroying the way of life that State Farm members... hold dear."

ALEC Über Allies

What does State Farm get out of ALEC membership and what does ALEC get out of State Farm?

State Farm General Counsel Roland Spies serves on the ALEC Private Enterprise Board, which sits jointly with its Public Sector Board at ALEC's annual board meeting. Emory Wilkerson, another corporate counsel, served in 2011 on the ALEC task force where corporate lobbyists vote as equals with elected officials on "model" insurance-related bills. State Farm has also been a chairman-level sponsor of ALEC's annual conference, which typically means a hefty payment to the organization ($50,000 in 2010), beyond other pay to play donations by the corporation to ALEC for a seat on its "Commerce, Insurance and Economic Development Task Force," for example.

State Farm's participation on ALEC's insurance committee has put the insurer in a position to benefit from several major pieces of insurance industry model legislation. The most prominent of these, in the auto insurance industry, may be the Consumer Choice Motor Vehicle Insurance Act.

ALEC's "Choice" Legislation Ensures Silver Lining For Insurers

Among other things, the "Consumer Choice Motor Vehicle Insurance Act" lowers the minimum amount that insurance companies typically must insure motorists for under state law in auto accidents. Hyped as greater "choice" for consumers in the bill's title, the law can mean lower payouts for insurance companies, yielding higher profits. The lower minimum coverage can also mean that consumers who thought they had insurance for serious accidents do not have enough to cover the injured parties. In Wisconsin, for example, Governor Scott Walker signed legislation within weeks of taking office in 2011 that reduced the state's minimum coverage for auto liability insurance by half.

ALEC has also promoted a model bill for secondary car parts -- the After Market Crash Parts Act -- again leading to lower costs for insurers that pay to fix their insured's vehicles, and transfer the risk to policy holders that after-market replacement parts might be inferior to the manufacturer's part.

Other ALEC bills related to auto insurance would:

  • Create an industry-controlled registry of insured motorists for states to identify motorists who flout mandatory insurance laws (a model law which effectively creates the same kind of public-private partnership in mandated auto insurance that many ALEC members would oppose when it comes to health insurance);
  • Restrict or prohibit non-economic damages (such as pain and suffering) if an individual in a car accident did not have insurance* -- an industry effort to ratchet up the sale of policies; and, among others,
  • Prohibit state governments from being involved in the private insurance market (a theoretical proposition that may be a preemptive strike against policy makers who have considered taxing gas to cover uninsured motorists)

As of April 15, at least 10 consumer-oriented U.S. corporations have severed ties with ALEC, including several companies joining State Farm on the Fortune 500 list, such as Kraft, Coca Cola, and McDonald's.

*This article was modified on 4/19/2012 to clarify that the second bullet refers to uninsured persons.  The image showing State Farm as a major ALEC donor alonside Koch Industries and others from 1998 was added on 4/23/12.


THey, as other ALEC members are very good at hiding their truth which is $$$ , profits above all life or quality of it for the people and planet. They are a corporate citizen which uses the mass of their profits, at this time, to stack and seal the deck from here on out AGAINST fairness, equality in favor of total power, legally to take whaat they want from everyone they can but pretend to be wearing a white hate. Do not be a part of their disguise. Evil has a way of morphing for the audience!

State farm support of voter suppression and against equal pay for women via their financial support of ALEC has caused us to drop our auto, homeowners and umbrella policy. Why would a company oppose equal pay for women and want to prevent people from voting. Our agent says company VP claims they don't support that part of ALEC but we considered that to be silly to consider.

It's important to note State Farm’s specific participation in ALEC. State Farm’s participation in and funding of ALEC relates to matters affecting insurance. That means they only participate in two of ALEC’s nine subject matter task forces - those affecting insurance. The model bills that have been in the news lately (“stand your ground” and voter ID) have come from another task force in which State Farm is not a participant and never has been. (In 2012, ALEC announced a refocusing on economic issues and the disbanding of that taskforce.) None of the money they give ALEC goes to support the work of these other task forces. All the funding goes to either the work of the two task forces with which they participate or, as a part of their general dues, to ALEC’s overhead items like office rent, the salaries and benefits of its employees and meeting expenses.

<blockquote> a part of their general dues, to ALEC’s overhead items like office rent, the salaries and benefits of its employees and meeting expenses."</blockquote> So ALEC as a whole can keep on supporting voter suppression and lobbying to block equal pay for women. See, we've learned from what anti-choicers say about services Planned Parenthood provides that have nothing to do with abortion.

All ALEC members work only on mattrers of specific interest to them, but they all fund, elect, and work with the same legislators for adoption of the entire ALEC agenda, and ALEC's sister organization, the Heritage Foundation, uses the entire ALEC agenda to "score" candidates, the GOP's most influential scoring sheet. Come for the insurance deregulation, stay for the homophobia and climate change denial.

Agreed, Alan. It would be like me saying that I donate money to the Hell’s Angels... but I don’t support their agenda of racism, sexism, violence and drug trafficking... I only support their once a year charity event for kids (or whatever it is they do to keep a toe in the morality pond). It’s just completely ridiculous. (ps. Just using this as an example... I’m sure there are some very upstanding members of the Hell’s Angels out there... they just don’t have a very good track record ;)

That’s completely absurd! If State Farm donates money to ALEC, they don’t choose where their money is being allocated. If they are supporting ALEC in ANY WAY financially, they are, de facto, supporting the ALEC agenda in its entirety (such as proliferation of firearms, voter suppression, environmental regulatory rollbacks, etc). Period.

After reviewing the SourceWatch list of ALEC corporations, it appears that both State Farm and Farmers are members. I am going to move all my insuarnce (home, fire, earthquake, umbrella, auto) to Allstate. As far as I can tell, that is about the only nonALEC insurance company. For small industries like insurance, package delivery, and phone service maybe someone should make a list of nonALEC alternative sources?

My State Farm Agent and I cried on the phone after 25 years with them, but we CANNOT condone such corporate corruption! Now Stand Your Ground Treyvon Martin and the Connecticut school children killings are linked to ALEC legislation written by the NRA. So are the disenfranchising voter laws and union busting. These legislators and corporations get together and write 350-page laws that sound good but do not benefit the people, only corporate profits. No More. We dropped State Farm for The Hartford through AARP and it is comparable.

Sorry to break it to you but if the Hartford is through AARP, you may want to do some homework. According to, as of Aug. 2019, AARP were on a list of 1,413 attendees for the ALEC 2019 Annual Meeting in Austin in 08/2019: “AARP, which – after member pressure – publicly distanced itself from ALEC in 2016 (see LA Times: A shamed AARP withdraws from right-wing lobbying organization ALEC) WAS BACK at ALEC with 20 members of staff. This included numerous AARP state directors and members of its national staff.“ Based on what I’ve researched, AARP were def w/ ALEC back in 2012 when you wrote your comment.