Allstate to Increase Size of Automatic Rate Hikes in 2022

Allstate announced another increase in auto insurance rates due to continued increases in physical damage and injury severity.

Source: The AU Times | Published on April 25, 2022

Allstate catastrophe losses

According to a statement issued on April 21 by the personal property insurer, unfavorable re-estimates of prior-year non-catastrophic reserves in the first quarter were approximately $160 million, reflecting the impact of "rapidly increasing costs of losses since the second quarter of 2021."

"Given the ongoing effects of loss costs from the current inflationary environment, Allstate has increased the magnitude of the auto rate increases we intend to implement throughout 2022," said Mario Rizzo, Chief Financial Officer, in a press release.

Allstate raised auto rates in 15 states by an average of 9.8 percent in March, according to Rizzo, and the company has now implemented 53 rate increases in 41 locations, averaging about 8.2 percent since the start of the fourth trimester. Furthermore, in March, Allstate's National General brand raised auto prices by an average of 3.8 percent at seven locations.

Allstate brought up the subject of auto rate increases last month. According to Glen Shapiro, president of property liability, the frequency of auto claims has remained below pre-pandemic levels, despite increased miles driven, but claims for off-peak crashes have increased. returned to historical norms Repair costs have risen as a result of supply chain disruptions and higher labor costs.

Rising rates, telematics, and data science are propelling Allstate to profitability.

Allstate continues to see "the impact of high severity inflation in the current reporting year," according to Rizzo, with incurred severity estimates rising 11 percent for damages, materials, and bodily injury.

Allstate-branded auto insurance rate increases totaled $862 million in the first quarter of 2022, up from $702 million in the fourth quarter of 2021.

Allstate also reported $462 million in disaster losses in the first quarter, before taxes. In March, catastrophe losses totaled $227 million, primarily due to tornadoes and Texas and southeast winds.