Prime Highlights:
- State Farm declared a record $5 billion dividend, the largest payout in its 103-year history, rewarding eligible auto insurance policyholders.
- The company also implemented a 10% premium reduction across 40 states, delivering an estimated $4.6 billion in customer savings.
Key Facts:
- Eligible customers will receive an average refund of $100, with amounts varying by state and premium paid.
- According to the Bureau of Labor Statistics, motor vehicle insurance rates have surged more than 50% over the past three years, the steepest rise in five decades.
Background:
State Farm on Thursday announced a record $5 billion dividend for its auto insurance members, marking the largest payout in the mutual insurer’s 103-year history. Eligible customers will receive an average refund of $100, though the exact amount will depend on the state and the premium paid.
The company said strong financial performance and better-than-expected underwriting results made the dividend possible. State Farm also reported a 10% premium reduction across 40 states, delivering $4.6 billion in savings to customers.
The announcement comes as auto repair costs begin to ease and accident frequency declined in 2025. However, premiums remain elevated. According to the Bureau of Labor Statistics, motor vehicle insurance rates climbed more than 50% over the past three years, marking the steepest increase in five decades.
Rising costs have pushed many drivers to shop for better deals. Credit reporting agency TransUnion said insurance shopping has become routine, driven by economic pressure and aggressive marketing from insurers.
State Farm faces strong competition from rivals, including Travelers, Berkshire Hathaway unit GEICO, Root, Chubb and Progressive. Mutual insurer USAA also announced a $3.8 billion payout to members in 2025. Progressive paid $1 billion in dividends to Florida customers under state profit-return rules.
Auto insurance represents 63% of State Farm’s property and casualty business. While auto claims costs are stabilizing, the company said homeowners’ insurance claims remain high, and it continues to adjust rates to reflect rising risks.
The dividend aims to reward policyholders at a time when affordability remains a key concern for American drivers.