State Farm, Louisiana's largest auto insurer, will cut auto insurance rates starting in April by an average of 3.2 percent for its roughly 1 million Louisiana policyholders.
Insurance Commissioner Jim Donelon, who is running for re-election this year, announced the rate decrease Thursday. It represents the third rate decrease by State Farm in the past nine months, totaling a drop of 7.7 percent.
The change, which will vary by policy, will go into effect April 1, and be applied to policies as they are renewed by customers.
“These decreases are directly attributable to competition in the auto insurance marketplace and again demonstrates that competition is truly the best protection for policyholders,” Donelon said in a statement. “These reductions are welcome news for one-third of our state’s auto policyholders who are insured by State Farm and this action will pressure other insures to take similar steps.”
Auto rates have soared in recent years, as distracted driving, cheap gasoline prices encouraging more drivers to get on the road and increasingly expensive repairs drove up costs. Louisiana has some of the highest auto insurance rates in the country.
After State Farm announced its first rate cut last summer, Donelon said he believed the auto insurance market was stabilizing.
The latest move will have a $48 million total impact, according to a rate request filed with the insurance department. State Farm, at 1,024,527 policyholders, covers about a third of Louisiana drivers.
The decreases come after State Farm raised rates by an average of 13.5 percent in 2017, and by 8 percent the year before. Last year, the company cut rates by 2.7 percent in July and again by 1.8 percent in September.
Louisiana's high auto rates caused the Legislature to set up a task force to address the issue and make recommendations on how to lower consumer premiums. Donelon appointed the members of the task force, which include legislators, insurance company representatives, the trucking industry and trial lawyers.
Insure.com reported last year that Louisiana had the second-highest auto insurance rates in the country, with an average premium of $1,921 in 2017, compared to the national average of $1,318.