State Farm announced a historic $5 billion dividend for its auto insurance members on Thursday, the largest in the mutual’s 103-year history.
“This dividend is possible due to State Farm Mutual’s financial strength and stronger-than-expected underwriting performance, which was reported by the entire industry,” the company said in a statement.
Customers can expect to receive a refund of $100 on average, although State Farm says this will vary by state and the amount of premium paid.
State Farm reports that it also reduced premiums by about 10% in 40 states, totaling $4.6 billion in cost reductions for customers.
This is a trend in the auto insurance industry. Auto repair costs are starting to fall and accident frequency has decreased in 2025.
But car insurance premiums have skyrocketed. By early 2025, rates had climbed more than 50% over three years, according to the Bureau of Labor Statistics, the highest inflation for auto insurance in 50 years.
Affordability has become a major concern for many customers and has led them to look for better deals.
TransUnion recently released a report showing that buying insurance has become a common activity for consumers, rather than a rare event prompted by the purchase of a new car or home.
“At this point, we can confidently say that regular purchases of insurance are just the new normal,” Patrick Foy, senior director of strategic planning for TransUnion’s insurance business, told CNBC in an interview.
The report notes that the main factors driving these fare purchases are economic pressures that push consumers to find ways to reduce household spending. At the same time, insurers are investing heavily in marketing and setting competitive rates.
Travelers, Berkshire Hathaway Geico, Root And Chub compete with State Farm, USAA and other mutuals, in which customers are also shareholders.
Progressive in particular, it pushed State Farm’s dominance in the auto sector and was among the leading auto insurers to announce significant financial returns to their customers in 2025. The company paid $1 billion in dividends to its customers in Florida, where state laws require insurers to return excess profits.
USAA announced a $3.8 billion payout to its members in all states in 2025.
The auto insurance business represents 63% of State Farm’s property and liability insurance business. Customer loyalty in auto insurance often leads to loyalty in homeowners insurance as well, where State Farm told CNBC it doesn’t see its claims costs decreasing and always strives to charge adequate rates to compensate.