Rand Harbert - State Farm Mutual Automobile Insurance Co’s Senior VP for California - announced on Thursday that the state’s auto insurance bigwig intends cutting premium rates by an average 8 percent for 3.3 million motorists. Harbert added that the reduction in rates was possible due to improving long-term trends in claims presented to the company by policyholders.

The drop in rates, which will affect all current and new policies renewed or bought from July 6 onwards, will result in a total savings of $219 million. Elaborating on the projected savings for motorists, State Farm spokesman Bill Sirola said that they move would, on an average, save 665,000 of the insurers customers nearly $75 a year each.

Citing the reasons behind the rate-cut move announced by State Farm, Sirola mentioned fewer accidents; economic slowdown; high fuel-price concerns leading to lesser driving; safer cars and stricter law enforcement restrict losses from damage claims.

According to State farm, the recent rate reduction is the fourth of its kind since 2004. The company said that it cut auto rates in California by 7.6 percent in 2004; 4.2 percent in 2005; and 10.1 percent in 2007. Over and above these cuts in premium rates, the company also claims to have returned $195 million to policyholders in March 2007, by way of a dividend.