State Farm to Return Nearly $900 Million to Auto Insurance Customers
State Farm Mutual Automobile Insurance Company has announced that auto insurance policyholders in 35 states and the District of Columbia will receive dividends totaling nearly $900 million.
The return of premiums, approved by the State Farm Mutual board of directors, will be paid by check or a credit to current customers' accounts over the next renewal cycle beginning today. The $891.6 million in dividends to policyholders brings the total amount of dividends State Farm has paid to auto insurance policyholders since 1991 to about $2.4 billion.
Dividends are a one-time return of premium based on recent claims experience. When State Farm's frequency and costs of claims are less than anticipated and business conditions permit, dividends allow State Farm to quickly return money to customers.
The announcement comes on the heels of State Farm Mutual's previous record high policyholder dividend, a $651 million program reaching customers in 29 states and the District of Columbia over a six-month period beginning last November.
In Florida, for example, this year's $62.9 million premium return follows last year's $116.6 million return. Florida Treasurer and Insurance Commissioner Bill Nelson says the returns are, "more good news for our insurance consumers. Auto premiums for many insurers were lowered last year. And this is evidence they're continuing to go down.
"In recent months, we have been scrutinizing the rates not only of State Farm, but also of a number of other major insurers—with an eye toward even further cuts," Nelson adds. "We hope there will be some more good news very soon."
State Farm says it cut its Florida auto rates an average of 3.6 percent, effective January 1, 1998. It is part of a larger program in which the company lowered auto insurance premiums in 34 states in 1997 and in 21 states so far in 1998. The company says favorable claims trends allowed it to lower its overall average rates by 1.6 percent company wide in 1997, the first such reduction in auto insurance premiums since 1974.