State Farm Mutual Automobile Insurance Co., the largest auto insurer in Arizona, is lowering its overall rates in the state for the first time since 1999, which will save customers $30.3 million annually.
The insurer is reducing its rates an average of 5.9 percent effective Feb. 1. This comes after State Farm raised its rates in 2001, 2002 and 2003.
After the decrease, State Farm's overall rates in Arizona will be 5.1 percent lower than they were seven years ago, said spokeswoman LuWanna Nielsen.
“The current decrease is driven primarily by consistent decreases in claim frequency over recent years,” she said. “When we see a decrease in frequency, which translates to a decrease in claims costs, then we pass that to our policyholders in the form of a decrease in their rates.”
In terms of claims frequency, the company said:
• Bodily injury liability claims have dropped 6 percent over the last five years.
• Property damage liability frequency has dropped 4 percent over the last four years.
• Medical payments frequency has dropped 6 percent over the last three years.
• Comprehensive frequency has dropped 4 percent over the last year.
• Collision frequency has dropped 6 percent over the last three years.
“I think it says something that drivers are being careful and not having accidents,” Nielsen said. “A significant portion of our rate decrease is really due to an increase in our accident-free discount for our policyholders, which means we have more people who have remained accident-free.”
Overall premium changes for individual motorists will vary depending on what policy they carry, the discounts for which they qualify, where they live, the kind of vehicle insured, who drives it and how much it is driven, Nielsen said.
“Some people's will be higher, and some people's will be lower,” she said.
The decrease likely means State Farm policyholders are good drivers because lower auto insurance rates will not be an industrywide trend, said James Frederikson, executive director of the Arizona Insurance Information Association.