Jim Donelon, State Insurance Commissioner, has given his nod of approval to the 9.6 percent rate cut proposed by State Farm Auto Insurance in Louisiana. The insurer, which covers nearly one-third of the private passenger car insurance market, has already slashed its rates several times in the past few years and has now cut its rates by a total of 11.9% in 2020 alone - a monumental 23% reduction when added to its previous rate cuts from the past two years.
For Louisiana drivers that are covered by State Farm, this means that there could be significant savings ahead when the new rate cut comes into effect from August 24th, with Advocate estimating that the new reduction could save Louisiana State Farm policyholders an estimated $131 million.
The decision for State Farm to cut its rates once again this year was approved and announced by State Insurance Commissioner, Jim Donelon, earlier this week when he said;
“State Farm provides auto insurance for more than a million Louisiana policyholders and has been at the forefront of giving consumers relief from their auto premiums due to decreased driving during the COVID pandemic… We’ve seen many other local and national insurers do the same since the issuance of nationwide stay at home orders that have resulted in Louisiana policyholders receiving over $202 million dollars in rebates or refunds.”
State Farm Senior Vice President, Kristyn Cook-Turner commented on the cuts to say;
“Current State Farm driving data and claims experience show a considerable decline in miles driven and fewer accidents,” “As a result, we’re looking for ways to continue supporting our customers while we monitor and adjust to trends.”
The second round of 2020 rate cuts comes as a result of the continuation of the COVID-19 global pandemic, which has now caused more than 136,000 deaths across the United States. Lockdown measures and stay at home orders have meant that Louisiana vehicle owners simply aren’t driving as much as they used to, resulting in fewer crashes and claims to insurance companies and fewer lawsuits. Some insurance providers, like State Farm, have chosen to pass on these cost savings to their customers by cutting insurance rates at a time when many people are struggling with the economic crisis, a move that has been welcomed by the community.
The planned rate reductions introduced by State Farm are in addition to an evolving Good Neighbor Relief Program, in which State Farm previously announced a $2 billion dividend, flexible customer payment options, and philanthropic relief for those affected by the Coronavirus pandemic.
Existing policyholders with State Farm will be able to reap the cost-benefit of the rate cut from August 24th by either renewing their policy or having State Farm cancel and reissue it to reflect the new cuts. Although the price decrease comes as a relief to many, despite the significant drop in premium rates over the last few years, the Louisiana state car insurance rate still remains among the most expensive in the country.