3 ms·

State Farm is in theory a mutual company, i.e. owned by its policy holders. Years ago (like more than 20) I used to get the occasional profit distribution check

by yborg 7y ago

State Farm is in theory a mutual company, i.e. owned by its policy holders. Years ago (like more than 20) I used to get the occasional profit distribution check, but that stopped happening in the 2000s. Apparently they discovered the concept of Hollywood accounting.

AnthonyMouse 7y ago
Maybe they just started using the money to charge lower premiums.
- deleted 7y ago
  [deleted]
hnu0847 7y ago
Amica pays an annual dividend whose percentage varies based on the number and types of policies you hold with them. That said, they weren't mentioned in the article and so far I haven't seen anything related to a rate reduction.
- pinko 7y ago
  Amica is a mutual insurance company, but the dividend is paid only if you're a mutual policyholder, as they now also offer non-mutual policies at lower rates, without the dividend. However, I believe the dividend is based on the company's claim payouts over the preceding 12 months, rather than number and types of policies you personally hold with them -- that can provide a discount on your policy rates, but not the dividend rate. So I would expect a larger-than-usual dividend from their auto insurance this year, assuming their paid claims are less than forecasted.
  - hnu0847 7y ago
    You are correct that the dividend amount also depends on Amica's claim payouts for the preceding 12 months, however I checked my statement from last year's payout and it lists a dividend percentage for each type of policy they sell, ranging from NONE (Automobile Liability and Physical Damage, Homeowners (Workers Comp)) to 20% (Boat/Yacht, Personal Umbrella Liability), so this seems to be a separate factor from their claim payouts for the preceding 12 months and also separate from the multi-policy premium discounts they offer. I will also add that these rates can also vary by state, as the statement specifically says "our latest rates in Texas". Based on what I'm seeing I wouldn't expect an increase in the annual dividend due to fewer car accidents, but a premium reduction might be possible.
hermitdev 7y ago
Ive received a check from State Farm within the last 5 years or so. Don't recall precisely when, but that it was before I got married 3 years ago. It would be nice to get an adjustment while self isolating. Farthest Ive driven my car in the last 2.5 weeks was to back up and pull into the adjacent spot next to my wife to jump her car so she could run the 1 mile to the pharmacy.
JonathonW 7y ago
IIRC, the last time I checked (sometime back last year), State Farm actually had spent the last few years running at an underwriting loss— they were taking in less in premiums than they were distributing in claims. They were mostly remaining solvent (and paying admin costs) through investment income. Which is probably about how they should operate. As a mutual company, if they’re routinely having to return profits to policyholders, their premiums are too high.
- icelancer 7y ago
  >> State Farm actually had spent the last few years running at an underwriting loss This is common amongst mutual and non-mutual companies. The spreads are pretty thin and a few ticks of variance in one direction can drive down profits massively. It's not a great business to be in.
spike021 7y ago
I'm not affiliated with State Farm other than being a paying customer; with that said, my parents, who are also customers, contacted their agent today (also my agent), and the agent told them there was a meeting today/this week between agents or the entirety of the SF org (I don't know all the details), and basically a decision is supposed to be made by Friday about paying out dividends to constituents. Again, not affiliated other than being a customer so that's all he said, she said. But if true, then that would be a nice way to get some money back into insured's hands.

by yborg 7y ago

AnthonyMouse 7y ago

Maybe they just started using the money to charge lower premiums.

deleted 7y ago
[deleted]

hnu0847 7y ago

Amica pays an annual dividend whose percentage varies based on the number and types of policies you hold with them. That said, they weren't mentioned in the article and so far I haven't seen anything related to a rate reduction.

pinko 7y ago
Amica is a mutual insurance company, but the dividend is paid only if you're a mutual policyholder, as they now also offer non-mutual policies at lower rates, without the dividend. However, I believe the dividend is based on the company's claim payouts over the preceding 12 months, rather than number and types of policies you personally hold with them -- that can provide a discount on your policy rates, but not the dividend rate. So I would expect a larger-than-usual dividend from their auto insurance this year, assuming their paid claims are less than forecasted.
- hnu0847 7y ago
  You are correct that the dividend amount also depends on Amica's claim payouts for the preceding 12 months, however I checked my statement from last year's payout and it lists a dividend percentage for each type of policy they sell, ranging from NONE (Automobile Liability and Physical Damage, Homeowners (Workers Comp)) to 20% (Boat/Yacht, Personal Umbrella Liability), so this seems to be a separate factor from their claim payouts for the preceding 12 months and also separate from the multi-policy premium discounts they offer. I will also add that these rates can also vary by state, as the statement specifically says "our latest rates in Texas". Based on what I'm seeing I wouldn't expect an increase in the annual dividend due to fewer car accidents, but a premium reduction might be possible.

hermitdev 7y ago

Ive received a check from State Farm within the last 5 years or so. Don't recall precisely when, but that it was before I got married 3 years ago. It would be nice to get an adjustment while self isolating. Farthest Ive driven my car in the last 2.5 weeks was to back up and pull into the adjacent spot next to my wife to jump her car so she could run the 1 mile to the pharmacy.

JonathonW 7y ago

IIRC, the last time I checked (sometime back last year), State Farm actually had spent the last few years running at an underwriting loss— they were taking in less in premiums than they were distributing in claims. They were mostly remaining solvent (and paying admin costs) through investment income. Which is probably about how they should operate. As a mutual company, if they’re routinely having to return profits to policyholders, their premiums are too high.

icelancer 7y ago
>> State Farm actually had spent the last few years running at an underwriting loss This is common amongst mutual and non-mutual companies. The spreads are pretty thin and a few ticks of variance in one direction can drive down profits massively. It's not a great business to be in.

spike021 7y ago

I'm not affiliated with State Farm other than being a paying customer; with that said, my parents, who are also customers, contacted their agent today (also my agent), and the agent told them there was a meeting today/this week between agents or the entirety of the SF org (I don't know all the details), and basically a decision is supposed to be made by Friday about paying out dividends to constituents. Again, not affiliated other than being a customer so that's all he said, she said. But if true, then that would be a nice way to get some money back into insured's hands.