Sears, Roebuck and Co.

Sears, Roebuck and Co. Was a pioneering American retail corporation that, in 1931, recognized a critical gap in its mail-order catalog business: its customers had no easy way to insure the automobiles they were purchasing. The company's leadership, seeking to provide a complete solution for the American middle class, partnered with Lloyd's of London to create a simple, standardized auto insurance policy that could be sold directly through the catalog. This pragmatic, retail-focused decision laid the foundational business model for what would become The Allstate Corporation.

The founding of Allstate is entirely unique in the history of the insurance industry: it was not founded by actuaries or financiers, but by an executive at a retail catalog company. In 1930, General Robert E. Wood, the President and Chairman of Sears, Roebuck and Co., was taking his daily commuter train to work in Chicago. Wood happened to be reading a business review that noted the exploding popularity of the automobile and the corresponding, urgent need for auto insurance. A neighbor on the train suggested that Sears—which was already selling tires, batteries, and auto parts through its mail-order catalog—should start selling auto insurance through the mail as well. Wood, a brilliant logistical thinker, recognized the genius of the idea. Traditional insurance was sold through expensive networks of independent agents who demanded high commissions. Wood realized that by bypassing the agents and selling policies directly to consumers via the trusted Sears catalog, he could significantly lower administrative costs and offer auto insurance at reduced rates. He assigned Carl L. Odell, an insurance broker and the neighbor who pitched the idea, to set up the new subsidiary. In 1931, the Allstate Insurance Company (named after a popular brand of Sears automobile tires) was officially incorporated. The Allstate model was a success, timing the explosion of the American middle class and the post-WWII suburban boom. In 1933, Allstate revolutionized the industry by creating a dedicated booth inside a Sears retail store at the Chicago World's Fair, realizing that customers wanted face-to-face interaction when buying insurance. This birthed the network of exclusive Allstate agents that exists today. Allstate operated as a profitable subsidiary of Sears for over six decades, eventually being spun off as an independent, publicly traded company in 1993, long after it had eclipsed its parent company in financial power and cultural relevance.