WASHINGTON — On Thursday, State Farm revealed its plan to allocate an unprecedented $5 billion dividend to its auto insurance customers, setting a new record for the mutual company’s 103-year history.

The company explained that this one-time cash-back dividend is feasible due to its robust financial health and better-than-expected underwriting results. These payments will be distributed this summer, with variations based on state and premium amounts paid.

As reported by Forbes, State Farm assured customers that no action is required on their part to receive the dividend. Policyholders might receive a direct check or a notification via email to initiate a digital payment, as the refund will not be provided as a credit.

While the average refund is anticipated to be approximately $100, the exact amount will differ for each customer.

This significant payout arrives amid growing concerns over the affordability of auto insurance. By early 2025, motor vehicle insurance rates had surged more than 50% over three years, marking the highest inflation in this sector in five decades, according to data from the Bureau of Labor Statistics, as reported by CNBC.

However, industry trends have recently improved. Auto repair costs have begun declining and accident frequency dropped in 2025. State Farm said it lowered auto premiums by about 10% across 40 states, totaling $4.6 billion in savings.

Insurance shopping has also become routine for many consumers. “At this point we can safely say that regular insurance shopping is just the new normal,” Patrick Foy, senior director of strategic planning for TransUnion’s insurance business, told CNBC.

State Farm reported total revenue of $132.3 billion in 2025, up from $123 billion the previous year, and net income of $12.9 billion, more than double its 2024 results.