State Farm Mutual Automobile Insurance Co. on Monday said it will refund $891.6 million to its policyholders in California and 34 other states and the District of Columbia as accident claims continue to fall.
State Farm's 3 million policyholders in California will receive a collective $172 million in refunds, the insurer said.
The refund amounts vary greatly from state to state, depending on the number of policies and the accident claim rate.
The refund is the second by the insurer in seven months.
The nation's largest auto insurer said lower claims from fire, vandalism, theft and storm damage are behind the refunds, which will be paid in the form of a dividend by check or a credit to accounts upon renewal of policies. Company spokesman Steve Witmer at the company's Bloomington headquarters said the reduction in claims is offsetting the higher costs of medical care and auto repairs.
The company recently completed distributing $651 million to policyholders in 29 states and the District of Columbia. It also cut policy rates by an average 1.6% last year in 34 states and has cut rates again in 21 states so far this year.
Insurers across the nation have been enjoying record profits as cars get safer and aging drivers become more cautious, reducing claims. The cash surplus and intense competition have led many to lower rates or refund money.
Dividends are a one-time return of premium based on recent claims experience. State Farm said it issues dividends when its frequency and costs of claims are less than anticipated.
States deemed ineligible for the dividend announced Monday are: Arizona, Arkansas, Delaware, Maine, Maryland, Nevada, New Jersey, New York, North Carolina, North Dakota, Ohio, Pennsylvania, South Carolina, Vermont and West Virginia.