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Allstate reports $1.17 billion loss in March alone

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Allstate announced “catastrophe losses” of more than $1 billion during the month of March and said Q1 losses total $1.69 billion.

The insurer attributed its bleeding bottom line to 10 events, and said it recouped some of its finances by “favorable reserve estimates for prior events.”

Allstate said in a press release that it responded to its financial troubles by implementing 7.6% auto rate increases throughout 10 locations, resulting in a 0.5% brand premium impact.

“Allstate continued to implement significant auto insurance rate actions as part of our comprehensive plan to improve profitability,” said Jess Merten, Allstate’s chief financial officer. “Since the beginning of the year, rate increases for Allstate brand auto insurance have resulted in a premium impact of 1.7%, which are expected to raise annualized written premiums by approximately $454 million.

“In addition, the California Department of Insurance recently approved our latest Allstate brand auto insurance rate increase filing of 6.9%, which we expect to implement in April and be effective in June 2023.”

Allstate is among a number of insurers raising rates to remain profitable as inflation, supply chain shortages, more complicated repair requirements, and weather events eat into their bottom line.

State Farm is increasing its insurance prices by an average of 6% in Illinois after finalizing a $178 million car insurance rate increase. It represented the company’s second auto rate hike in the state this year. The first, which will take effect in June, is a $182 million rate increase expected to impact more than 3 million drivers throughout the state.

The two increases combined will raise the average consumer’s insurance bill by $114 annually, according to the Public Interest Research Group (PIRG).

“When will these back-to-back car insurance rate hikes end, and how can Illinois consumers be confident they are getting their money’s worth? It’s time to empower the Department of Insurance to reject or modify unfair or excessive car insurance rate hikes,” said Illinois PIRG Director Abe Scarr. “The people of Illinois deserve better.”

Some lawmakers and consumer groups are fighting back against insurance hikes in Illinois.

The Motor Vehicle Insurance Fairness Act, HB 2203, filed in February, aims to give the state and its constituents more control over policy increases and would ban insurance companies from using non-driving factors when setting rates.

The bill’s co-sponsor, Will Guzzardi (D-Chicago), spoke out against State Farm’s latest spike and how the extra cost to consumers contrasts with the company’s chief executive receiving $24.2 million in compensation last year.

“Yet again, insurance companies raise rates on families who are struggling to get by, all while lavishing its CEO with exorbitant compensation,” Guzzardi said. “We need accountability for these rate hikes, and we need strong rules to protect consumers from predatory, discriminatory, and unnecessary rate increases.”

Illinois isn’t the only state taking action against increases, with Georgia’s state senate approving legislation last month that will prevent insurers from increasing rates without state approval.

The passing of House Bill 221 closes a loophole in Georgia law that allowed auto insurance companies to bypass the Office of Commissioner of Insurance and Safety Fire and increase rates by as much as 25% in a single filing.

According to ValuePenguin’s State of Auto Insurance in 2023 report, auto insurance carriers are expected to raise premiums by an average of 8.4% this year.

The average cost of full coverage insurance is expected to reach $1,780 per year, and 45 states will see their car insurance premiums increase this year by at least 1% with drivers in Michigan, Florida, and Rhode Island paying the highest premiums.

Drivers with traffic violations this year will see their premiums jump 52% on average with traffic violations in North Carolina and California costing drivers the most causing a more than 100% premium increase. Car insurance for new electric vehicles (EVs) will be 28% higher than new gasoline-powered cars, according to ValuePenguin.

Divya Sangameshwar, ValuePenguin insurance expert, says millions of Americans may be surprised when they receive their 2023 statements.

“This year’s auto insurance rate increase is the highest rate increase since 2017,” she said. “After two years of keeping rates low for drivers, car insurance companies are raising rates in 2023 due to an increase in car repair costs and claims.”


Featured image: The Allstate Canada head office in Markham, Ontario, Canada. The Allstate Corporation is an American insurance company. (JHVEPhoto/iStock)

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