State Farm and New Jersey Manufacturers will pay insured motorists close to $200 million in dividends this year as the state's auto insurance picture continues to improve three years after instituting reforms.
Yesterday, New Jersey Manufacturers Insurance Company (NJM) based in West Trenton, N.J., said it would pay a special dividend to its customers amounting to $69.9 million.
Wednesday, State Farm Indemnity Company, a subsidiary of Bloomington, Ill.-based State Farm Insurance Companies, said it would make dividend payments to its auto policyholders amounting to $130 million.
State Farm said the payments would be made to over 300,000 eligible customers by mid-December. The average dividend payment would amount to $400 per policy.
NJM said 387,000 New Jersey policyholders and 8,000 Pennsylvania policyholders would see checks averaging $176. The checks will be mailed from Nov. 20 to Dec. 15.
NJM credited the company's efficiency and reduction in claims frequency with the payment of the special dividend.
"The true value of an NJM policy goes beyond dividends and low premium rates," Anthony G. Dickson, president and chief executive officer of NJM, said in a statement. "Our long-term focus on the policyholders' needs–built on a foundation of stewardship, integrity and service–sets us apart."
Patrick W. Breslin, a company spokesman, said the special dividend is higher than last year's, which averaged $109. The special dividend is in addition to a regular dividend that is credited to new policyholders each year at their renewal.
Mr. Breslin said this is the 13th year in a row the company has paid a special dividend. The company has paid dividends each year to policyholders since 1918.
For its part, State Farm Indemnity said the payments were possible because of the state's regulatory reforms and stabilization of an insurance market that has seen an increasing number of carriers competing for policyholders' business.
"Our results prove competition is good for consumers," said Carla Temple, vice president, State Farm Indemnity, in a statement. "With a stable and consistent insurance environment, companies can operate successfully in New Jersey while benefiting policyholders and providing drivers with competitive rates," she said.
Prior to the reforms, State Farm considered leaving the state, but those plans were put on hold in 2003 after the state passed a series of reform measures.
Dick Luedke, a State Farm spokesman, said the payments were not reflective of other dividend payments the carrier may pay policyholders across the country.
He said State Farm Indemnity, which was formed in 1992, paid $41.3 million in dividends in 1997 and $39.8 million in 1998.
According to National Underwriter's Highline Data Service, NJM is the second largest writer of private passenger auto policies in the state with 13.3 percent of the market and $812 million in direct written premium in 2005. State Farm is third with 9.8 percent of the market and $596 million in DPW. Allstate is first, with 15.5 percent of the market and $946 million in direct written premium.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.