After years of double-digit rate increases that pushed auto insurance costs to record highs, insurers in several states are now filing for rate reductions. In California, Florida, and Louisiana, major carriers have announced cuts ranging from 6% to 15%, citing factors including improved loss ratios, fewer accidents, and reduced litigation costs. For collision repairers, the trend is worth watching because insurer profitability and claims dynamics have a direct impact on shop volume and reimbursement negotiations.
The shift comes after auto insurance emerged as the leading contributor to inflation nationwide in 2024. That year, the average annual premium reached $2,543, up 26% from 2023, according to Bankrate. Insurers had implemented steep rate increases following years of climbing claims costs, supply chain disruptions, and rising repair expenses. Premiums have continued to rise in 2025, reaching an average of $2,697 for full coverage, but the pace of increases has slowed significantly — a sign that the market may be stabilizing after years of turbulence.
California: State Farm reverses course less than a year after 17.7% hike
State Farm, California’s largest auto insurer, filed for a 6.2% rate reduction with the state’s Department of Insurance, the company announced. If approved, the decrease would take effect February 23, 2026. The filing comes less than a year after the company implemented a 17.7% rate increase in the state.
Dan Krause, State Farm Senior Vice President, said in the company’s press release that the filing “reflects our ongoing commitment to provide quality coverage and increasingly competitive rates for our customers.” The insurer attributed the reduction to recent trends involving less costly physical damage claims.
Florida: Top five insurers reverse course after years of sharp increases
Florida’s top five insurers, which together represent 78% of the market, are cutting rates by an average of 6.5% in 2025, according to the Florida Office of Insurance Regulation. The reductions follow years of significant increases: rates rose 31.7% in 2023 and another 4.3% in 2024.
Progressive is returning nearly $1 billion to Florida policyholders, averaging about $300 per customer. State Farm has filed its fourth rate reduction in a year, delivering a combined 20% decrease over 12 months. The state’s auto liability loss ratio dropped to 53.3% in 2024, the lowest in the nation, down from 80.5% in 2022.
“We are seeing steady signs of auto insurance rates dropping in Florida,” Insurance Commissioner Mike Yaworsky said in the OIR announcement. “This is great news, and I’m glad consumers will start feeling relief in their premiums soon.”
Louisiana: 20+ insurers file decreases as claims experience improves
More than 20 auto insurers have filed rate decreases in Louisiana since January 2025, with an average market impact of 2.3% through July, according to the Louisiana Department of Insurance. This follows increases of 15.3% in 2023 and 10.8% in 2022.
Louisiana Farm Bureau received approval for an 11.8% rate decrease affecting more than 80,000 policyholders, effective January 1, 2026. Allstate was approved for a 7.6% decrease, and Encompass/National General received approval for a 15% reduction, Insurance Journal reported. Insurers cite reduced accident frequency as the primary driver.
“As cost drivers in the market go down, losses go down with them, and businesses are incentivized to compete for customers through lower pricing,” Insurance Commissioner Tim Temple said in the LDI announcement.
What’s driving the reductions — and what it could mean for shops
While these state-level reductions represent a notable shift, auto insurance remains expensive by historical standards. Florida and several other states remain among the most expensive markets in the country, with average annual premiums well above the national average. Industry-wide, rate increases are slowing, with analysts expecting an average 7.5% increase nationally in 2025, but outright decreases remain concentrated in specific markets.
Different factors are at play in each state. In Florida, state officials point to legislative reforms enacted in 2022 and 2023 that reduced litigation costs. In Louisiana, insurers credit fewer accidents and improved claims experience, trends collision repairers have also observed as claim counts have softened
For shops, insurer rate reductions don’t translate directly to changes in claims handling or labor rate negotiations. But the underlying dynamics are relevant. Lower premiums could reduce the number of uninsured or underinsured drivers on the road, potentially improving collectability on repairs. At the same time, the factors insurers cite for improved profitability (fewer accidents, lower severity, reduced litigation) are the same pressures that have softened volume at many shops over the past year.
Whether improved insurer margins lead to any changes in reimbursement practices remains to be seen. For now, the trend signals a shift in the broader insurance market that shops in affected states should keep on their radar.
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.