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Allstate’s auto premiums earned increased by nearly $1 billion in past year

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Allstate reported nearly a $1 billion increase in premiums earned from auto insurance during the first quarter compared to Q1 2023, according to financials released by the company

The company reported $8.8 billion in auto premiums earned in the first quarter, while it earned $7.9 billion in premiums in the first quarter of 2023. 

“The profit improvement was broad-based,” said Tom Wilson, Allstate chair, president and chief executive, in the company’s Q1 earnings call. “It reflects successful execution of the auto insurance profit improvement plan, attractive homeowners’ insurance margins, and they also benefited from lower catastrophe losses in this quarter.” 

Rate increases exceeded 16% in both 2022 and 2023, Wilson said. Those increases continued at about 2.4% during the first quarter. He said the increases are to keep up with cost trends and improve margins in states not achieving target margins. 

“While auto margins have improved due to our price improvement actions we remain fixed on ensuring that rate levels continue to keep pace with underlying cost trends driving improved profitability in those states not yet achieving target margins,” Wilson said. 

Premiums started outpacing losses and expenses in the third quarter of 2023, Wilson said. 

The first quarter saw a slight drop in underlying loss and expense that reflects lower claim frequency that benefited from milder weather and improving operating efficiencies, he said. He said this was partially offset by higher severity. 

Bodily injury coverage drove higher severity estimates during the first quarter, Wilson said. He said this was partially offset by lower accident frequency. 

Wilson didn’t specify which states Allstate is watching but has mentioned concerns with California, New York, and New Jersey in past calls. Each of the states has received increases that were implemented in the first quarter. 

Overall, after expenses, the company reported an $1.2 billion in net income during Q1 2024, compared to a $346 million loss during the same period last year. 

Motor vehicle insurance is noted as one contributor to the consumer price index rising to 3.5% in March, according to a report released by the U.S. Bureau of Labor Statistics (BLS)

Auto insurance increased by 2.6% in March from February and a 22% increase from a year ago. Auto repair costs increased 1.7%, up 8.2% in a year. Gasoline costs also increased 1.7% in March with an annual increase of 1.3%. 

Yahoo Finance reported that auto insurance’s 22.2% annual increase is the largest since December 1976 when prices increased 22.4%.


Photo courtesy of JHVEPhoto/iStock

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