State Farm auto insurance losses are higher than ever before

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The insurer lost more money on car policies throughout 2016 than it has in its almost century-long existence.

State Farm auto insurance lost more money providing drivers with coverage in 2016 than they have in any other year since its creation 95 years ago.

All told, the insurance company lost about $7 billion within the vehicle coverage segment of its business.

State Farm auto insurance is by far the biggest vehicle insurer in the United States. It received $35.8 billion in claims and adjustment expenses in 2016. That total, in combination with the operation costs for that segment led to an approximate $7 billion loss. This represents a marked increase over the figures from only one year before. In 2015, its auto insurance underwriting loss was about $4.4 billion. Therefore, in one year, it increased by 63 percent.

Many people are calling the State Farm auto insurance losses a direct reflection of distracted driving trends.

A large number of industry analysts are calling the staggering increase in losses at State Farm as the most visible indicator of distracted driving trends. In particular, many people have been pointing to the rise in mobile device use by drivers while behind the wheel. A number of new studies and statistics have recently aligned with this theory. The loss figures from State Farm only illustrate that data more clearly.

Aside from the increase in distracted driving, there are other factors at play which have been propelling the losses upward. For instance, both medical costs and repair prices have been seeing a sharp rise over the last few years.

This has led many auto insurance companies to boost their rates in order to keep up with the heightened expenses associated with claims payouts.

State Farm auto insurance raised its rates by the largest amount in 14 years within Illinois (its home state) last year. Customers are now wondering if they will be facing additional rate hikes following these newly released figures. Moreover, that insurer isn’t the only one feeling the pinch from these trends. Allstate has also boosted its rates by substantial amounts for the last two years in order to keep up with costs.


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