Repairer Driven News
« Back « PREV Article  |  NEXT Article »

Progressive won’t be ‘as open’ in California, New York, New Jersey without rate increases

By on
Share This:

Progressive will continue to seek rate increases in New York, New Jersey, and California this year, according to a company Q4 earnings call. 

“We’re in the midst of talking to the departments and showing our verification for needs for those rates,” said Tricia Griffith, Progressive chief executive officer, when questioned about the company’s specific plans in the states. “All I can say is that we’ll get what we need to, to be at our target profit margins, or we won’t be able to be as open.” 

Griffith’s comments sound similar to ones made by Allstate’s CEO Tom Wilson about the three states in December during a Goldman Sachs Financial Services Conference. 

“If we don’t get price increases this year, or approved this year, in those states, we’re going to move from just not taking on new businesses to having to say goodbye to existing customers,” Wilson said during the conference. “We don’t want to do that. I think the regulators would prefer we not do that. We are not threatening anybody. We are just saying we can’t afford to lose that much money in those three states.”

Days after Wilson made the comments, Allstate announced double-digit rate increases for auto insurance in all three states. California approved a 30% increase, New York a 14.66% increase, and New Jersey a 20% increase, according to an Allstate press release.

Griffith didn’t answer direct questions about what type of rate increase Progressive was asking for in the states. 

Progressive isn’t planning any significant rate adjustments at this time for other states, Griffith said. 

Last year, the company announced a plan for “aggressive” rate increases, increasing by 4% companywide during the first quarter. It raised rates by 13% in 2022. 

Progressive netted $1.9 billion in Q4 2023, a 141% increase from the $826.4 million the company netted in Q4 2022, according to the company’s December earnings release

The company’s net income for 2023 was $3.9 billion, more than a 400% increase from 2022. The company recorded $721.4 million of net income earned in 2022. The 2023 annual amount is unaudited. 

Allstate plans to continue increasing auto insurance rates in at least 10 states in 2024, including New Jersey and New York, according to the company’s Q4 earnings call. 

Mario Rizzo, Allstate president of property liability, answered a question on the earnings call about whether the last year’s price increases in New York, New Jersey, and California were adequate. 

“In California, you will remember we filed a 35% rate,” Rizzo said. “We got approval for 30% but we got approval earlier than our expected effective date. So, effectively, we filed our full rate need and got approval for our full rate need.”

Allstate feels comfortable writing business in California again, Rizzo said. He said future loss trends could cause the company to reevaluate. 

“In New Jersey, it’s kind of the opposite story we filed for 29 points of rate,” Rizzo said. “We got approval for just under 17% and as a result of that, we are going to continue to take the more restrictive underwriting actions that we have been taking in New Jersey.” 

Rizzo said the company will continue to pursue rate increases in New Jersey. 

“New York is kind of somewhere in between,” Rizzo said. “We got approval for a 14.6% rate in December. We have implemented that, that helps, but we still need more rate.” 

The insurer netted $1.5 billion in Q4, a 496% increase from the $303 million loss the insurer netted in Q4 2022. 

While Allstate had a profitable Q4, the company ended the year in the red with a $316 million loss. Yet, the company ended with a 77% increase from the $1.4 billion loss in 2022.

State Farm reported a $3.5 billion increase in net worth for 2023. It reports $725 million in dividends to policyholders and issued a record $118 billion in new policy volume.

Its property and casualty (P&C) group of companies had an underwriting loss of $14.1 billion for 2023, compared to a $13.2 billion loss in 2022, according to a company press release.

It says the company witnessed an improvement in auto lines’ underwriting results, but homeowner-incurred catastrophe claims offset it. Auto insurance represents 64% of State Farm’s P&C companies.

State Farm vaguely mentioned it would take a “state-specific” approach to improve auto line profitability. 

Carrier Management recently reported that GEICO had a pre-tax underwriting profit of $3.6 billion for 2023. It saw a $1.9 billion underwriting loss in 2022. P/C reinsurance operations added another $2 billion in pre-tax underwriting profit, it said.

GEICO’s $3.6 billion pre-tax underwriting profit translates to a 90.7 combined ratio, more than 14 points below the 104.8 recorded in 2022,” Carrier Management wrote. “The only better year of underwriting performance at GEICO in the last 10 was 2020 when COVID shutdowns kept drivers off the roads. In 2020, GEICO’s combined ratio landed at 90.2, fueling a $3.4 billion pre-tax underwriting profit.

“GEICO’s combined ratio improvement in 2023 looks stunning against competitors Progressive and Allstate, which both posted double-digit premium jumps in 2023 but smaller improvements in their personal auto combined ratios.”


Photo courtesy of asbe/iStock

Share This: