State Farm on Thursday announced a historic $5 billion dividend for its car insurance members, the largest in the mutual insurance company’s 103-year history.
“This dividend is possible due to State Farm Mutual’s financial strength and a stronger than expected underwriting performance, which has been reported industry wide,” the company said in a statement.
Customers can expect to receive $100 refund on average, though State Farm says it will vary by state and by the amount of premium paid.
State Farm reports it has also lowered premiums by about 10% across 40 states, totaling $4.6 billion in lower costs for customers.
That’s a trend across the motor vehicle insurance industry. Auto repair costs are starting to decline, and the frequency of accidents declined in 2025.
But car insurance premiums have soared. By early 2025, rates had climbed by more than 50% over three years, according to the Bureau of Labor Statistics, the highest inflation for motor vehicle insurance in 50 years.
Affordability became a primary concern for many customers and led them to shop around for better deals.
TransUnion recently issued a report showing insurance shopping has become a routine activity for consumers, rather than a rare event prompted 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, the senior director of strategic planning for TransUnion’s insurance business, told CNBC in an interview.
The report noted that the main drivers behind the rate shopping are economic pressures pushing consumers to find ways to reduce household expenses. At the same time, insurers are investing heavily in marketing and setting competitive rates.
Travelers, Berkshire Hathaway’s Geico, Root and Chubb compete with State Farm and USAA and other mutuals, where customers are also shareholders.
Progressive in particular has been pressuring State Farm’s dominance in auto and was among major auto insurers announcing significant financial returns to customers in 2025. The company paid a billion dollars 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 across states 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 too, where State Farm told CNBC, it is not seeing its claims costs subsiding and it’s still working to charge adequate rates to compensate.
