Auto insurer State Farm Mutual will give $5 billion back to qualifying drivers throughout the country in the form of single distribution payments this summer, the company announced.
State Farm Mutual, headquartered in Bloomington, Illinois, said it would be making one-time payments of roughly $100 to drivers of more than 49 million State Farm insured vehicles. The payments are being made due to “stronger than expected underwriting performance,” the company said.
“As a mutual company with a customer-first focus, State Farm Mutual is able to provide value directly to our customers while maintaining financial strength to keep our promises in the future,” State Farm Mutual President and CEO Jon Farney said in a statement. “That translated this year to lower auto rates and cash back in the form of a $5 billion policyholder dividend.”
Officials with State Farm did not immediately respond to additional requests for comments and clarification on how many New York State drivers would be paid.
Independent broker Kevin Shakil, president of Melville-based Tekbytes Insurance Brokerage, said insurance carriers rarely make distribution payments back to customers.
However, Shakil said, as a mutual insurance company, State Farm’s operational structure is different from traditional insurance carriers, as insured customers are effectively owned by its policyholders.
“Not every insurance company is a mutual insurer,” Shakil said. “A mutual company is owned by the policyholders in a sense.”
Check back on this story for updates.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.