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State Farm Policyholders to Get Refund

Feb 28, 2007

By Scott Miller, The Pantagraph, Bloomington, Ill.

Mar. 1--BLOOMINGTON -- People with car insurance through State Farm Insurance Cos. will receive a refund for the first time in seven years.

While reporting a $5.32 billion profit Thursday, State Farm said it will pay about $1.25 billion in dividends to auto customers in the U.S. and New Brunswick, Canada.

"The last time we issued a dividend was 2000," said State Farm spokesman Dick Luedke.

In Illinois, he said, the average refund is $25 but will vary by customer depending on how much premium they paid in 2006. State Farm will refund Illinois customers 7.5 percent of the premium paid in 2006, he said. Total dividend in Illinois will be $59.8 million.

"Generally, if your amount is $15 or more, you're going to get a check in the mail," Luedke said. "If it's less than that, your State Farm policy will be credited."

Dividend payments will begin in April and continue throughout the year.

State Farm reported a $945 million underwriting gain on its auto business last year, up from $585 million in 2005, according to an annual financial report filed with state insurance regulators Thursday.

Luedke said the dividend is based on more than one year of financial results in the auto business.

The deal doesn't necessarily signal a reduction in auto insurance rates next year, he said, noting that prices have come down in recent years.

Robert Hartwig, president and chief economist of the Insurance Information Institute in Washington D.C., said rates should continue to fall.

"Auto insurance prices are falling across the country for the first time since 1999," he said.

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Copyright (c) 2007, The Pantagraph, Bloomington, Ill.

Distributed by McClatchy-Tribune Business News.

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