State Farm is changing the contract terms for its captive agents, including parts of the agreement tied to health insurance, as the insurer adjusts how agents are paid and supported.
The move comes as State Farm reevaluates the benefits it provides to agents, who operate as independent contractors rather than employees. The company said changes in the health insurance market and regulatory environment have made it increasingly difficult to offer health coverage support and that resources are being provided to help agents find alternative options.
Agents who choose not to sign the updated agreement may be eligible for a transition benefit, according to the company.
The contract changes are part of State Farm's broader effort to combine its agent network with digital tools and artificial intelligence. The insurer said customers increasingly expect faster and simpler service while still valuing personal relationships with agents.
That approach will include greater use of artificial intelligence across the company's operations. Chief digital and information officer Joe Park told Best Wire AI will help simplify customer interactions, while agents will be "equipped to provide more personalized advice, build deeper relationships and guide customers across auto, home, life and financial services."
The changes come after a stronger financial year for State Farm. The insurer reported net income of $12.9 billion in 2025, up from $5.3 billion a year earlier, as results improved across its auto, property/casualty and life insurance businesses.
According to BestLink, State Farm was the largest writer of private passenger auto insurance in the United States in 2024 with an 18.9% market share. It was also the largest homeowners multiperil insurer, with an 18.2% market share.
