State Farm’s 3.3 million California auto insurance policyholders will soon see a decrease in their premiums, as the California Department of Insurance approved an 8 percent, $219 million rate cut.
The 8 percent rate cut is a statewide average. The actual savings for individual policyholders may be different, depending on a number of rating factors, the company said.
As the largest auto insurer in the state, State Farm has 3.3 million auto insurance policies in California, covering 13 percent of the auto insurance market, the DOI said. Under the newly approved reduced rates, California policyholders will save an average of about $66 per policy per year.
As an example, State Farm customers in Los Angeles County will save a total of $50 million per year under the new rate reduction, with the average L.A. driver saving $75 per year. State Farm writes 665,000 policies in Los Angeles County, the DOI said.
State Farm’s California Senior Vice President Rand Harbert pointed out the reduction was possible because of the improving long-term trends in claims submitted to the company by policyholders. “Our premiums are based on what we calculate we will need in the future to meet the obligations we have to our policyholders,” the Woodland Hills-based executive said during a press conference with Insurance Commissioner Steve Poizner, “and because our recent experience and trends are favorable, it allows us to pass along those savings to our customers in the form of lower rates.”
“We are pleased to be able to help our customers at a time when many people are struggling financially due to the economic challenges we all face,” Harbert added.
The effective date for the new rate cut is July 6, 2009.
Sources: DOI, State Farm Insurance California