Thousands of auto insurance policyholders in Ohio will soon be paying less on premiums as insurance giant State Farm announces plans to cut rates for drivers in the state by 14.3%.
The reduction is expected to save the insurers’ 1.9 million customers in the Buckeye State an estimated $174.1 million.
The decrease applies to current policyholders at renewal, as well as new and returning clients.
The cut comes after State Farm’s announcement in May that it was working to reduce rates in every state by an average of 11%. Once implemented, customers of the country’s largest auto insurer could save a total of $2.2 billion.
“Current State Farm driving data and claims experience show a considerable decline in miles driven and fewer accidents,” said Robert Stewart, the firm’s senior vice-president. “As a result, we’re looking for ways to continue supporting our Ohio customers while we monitor and adjust to trends.”
Will others follow?
State Farm’s move may prompt other state insurers to follow suit, said Dean Fadel, president of the Ohio Insurance Institute.
“State Farm is the market share leader in Ohio, and sometimes what the market share leader does affects what others may decide to do,” he told The Times-Reporter.
However, James Lynch, chief actuary of the Insurance Information Institute, explained to The Times-Reporter that some insurers in the state have already offered rate cuts.
“Different insurance companies are taking different approaches to this,” he said. “Some are handling this as time passes by extending credits. Some other companies have done what State Farm is doing.″
Among these companies is State Auto Financial, which started slashing premiums at renewal by 5% in April.
“As the driving public gets back behind the wheel, we plan to build additional benefit of the slowdown into future rates, on a state-by-state basis, and based on frequency and severity trends at the local level,” the insurer said in a statement.
“To the extent that lower miles driven or claims volume persists, we will take that favorability into account in future renewal rates. Some of this favorability may be offset by higher repair costs driven by more high-speed crashes and higher auto repair shop costs.”