The Bloomington-based firm is the nation’s largest underwriter of auto insurance. State Farm is seeking regulatory approval in each state to reduce auto rates nationwide, and it estimates the national average for those rate cuts to be 11%.
Last month, State Farm said it would return $2 billion to policyholders as part of its “Good Neighbor Relief Program" because fewer people are driving during the health crisis. Most auto policyholders received a 25% credit. All together, State Farm estimates its customers could save about $4.2 billion between the rate reduction and the rebate.
Rival insurers, including Allstate, Geico and Progressive Insurance, issued $10.5 billion in credits or reduced premiums in April, citing a reduction in driving due to the coronavirus lockdowns.
“As we continue to see driving behavior evolve based on current trends, we are looking to cut rates,” said Kristyn Cook-Turner, a senior vice president at State Farm.
Cook-Turner declined to say how much less policyholders have driven since states began implementing stay-at-home orders.
According to Arity, a mobility data and analytics firm owned by Allstate, the number of miles driven is down 38% as of May 9. The firm expects people will hit the road more as the weather improves.
Cook-Turner said it is still too early to predict if Americans will continue drive less as the year goes on.
“We don’t know how long these trends will remain,” she said.
Since the start of the pandemic, consumer advocacy groups like the Consumer Federation of America have urged state insurance commissioners to push insurers to cut auto rates.
Doug Heller, an insurance expert with the organization, said many State Farm customers will welcome the rate reduction, but 11% won’t be enough savings for millions of Americans who are unemployed or have experienced hardships because of the COVID-19 health crisis.
“There is no question that right now, and for the foreseeable future, auto insurance rates are excessive and consumers should be paying less," Heller said. “Our driving has changed dramatically, and it will not snap back to pre-pandemic levels anytime soon, if ever.”