State Farm advertises an average refund of $100 for auto insurance customers

State Farm on Thursday announced a historic $5 billion dividend to its auto insurance members, the largest in the mutual insurer’s 103-year history.

“The dividend is possible due to State Farm Mutual’s financial strength and stronger-than-expected underwriting performance, which has been reported industry-wide,” the company said in a statement.

Customers can expect an average of $100 back, although State Farm says that will vary by state and the amount of premium paid.

State Farm reports that it also reduced premiums by about 10% in 40 states, for a total of $4.6 billion in reduced costs for customers.

This is a trend in the auto insurance industry. Car repair costs begin to decline, and the frequency of accidents will decline in 2025.

But auto insurance premiums have risen. By early 2025, rates had risen more than 50% over three years, according to the Bureau of Labor Statistics, the highest rate of auto insurance inflation in 50 years.

Affordability has become a primary concern for many customers and has prompted them to shop around for better deals.

TransUnion recently released a report showing that insurance shopping has become a routine activity for consumers, rather than a rare event driven by a new car or home purchase.

“At this point we can safely say that regular insurance shopping is just the new normal,” Patrick Foy, senior director of strategic planning for TransUnion’s insurance business, told CNBC in an interview.

The report indicated that the main drivers behind shopping prices are economic pressures that push consumers to find ways to reduce household expenses. At the same time, insurance companies are investing heavily in marketing and setting competitive rates.

travelers, Berkshire Hathaway geeko, root and Chubb It competes with State Farm, USAA and other mutuals, where customers are also shareholders.

progressive In particular, it has been pressing State Farm’s dominance in the auto space and was among the major auto insurers to announce big payouts to customers in 2025. The company paid a $1 billion dividend to its customers in Florida, where state laws require insurers to return excess profits.

USAA announced a $3.8 billion payout to its state members in 2025.

The auto insurance business represents 63% of State Farm’s property and casualty insurance business. Customer loyalty in auto insurance often leads to loyalty in homeowner’s insurance as well, with State Farm telling CNBC it doesn’t see its claims costs declining and is still working to charge adequate rates to compensate.