State Farm Mutual Automobile Insurance Co. deepened rate cuts for California homeowners and drivers in 2007, state Insurance Commissioner John Garamendi said Wednesday.

The Bloomington, Ill.-based company, which is the largest homeowners’ insurer in the state, decided to increase its original discount, announced in September, to an average of 20 percent. The company originally proposed an 11 percent rate cut. The discount should affect about 1.4 million customers and should save each customer around $164 a year on their homeowners policies.

For auto policies, the cuts will be 10 percent and will affect 3 million drivers. The company had originally proposed an 8 percent cut. The discount could save drivers about $80.

Garamendi called the new lower rates a New Year’s gift to State Farm customers. The rate cut will take effect in April.

“Our analysis of their claims indicated the reductions should be significantly greater. We forced them to essentially double what they wanted to do,” he said in a statement.

State Farm said the cuts were made possible by an increasing drop in costs. In the past year, Garamendi has pressured major insurers to reduce their homeowners’ rates, accusing the industry of reaping profits at the expense of consumers. He cited a recent study that showed the state’s 20 largest carriers paid less than 50 cents to the dollar in claims industry statistics show that average should be around 60 to 65 cents.

Garamendi’s campaign has prompted State Farm and many other major insurers to slash rates as well.