Allstate to Increase Magnitude of Auto Rate Hikes in 2022

Allstate said it is raising auto insurance rates more due to continued upticks in physical damage and bodily injury severity.

The personal property insurer said in a statement on April 21 that first quarter unfavorable non-catastrophe prior-year reserves re-estimates were about $160 million, reflecting the impact of “rapid increases in loss costs since the second quarter of 2021.”

“Given the ongoing loss-cost impacts of the current inflationary environment, Allstate has increased the magnitude of auto rate increases we expect to implement throughout 2022,” said Mario Rizzo, CFO in the statement.

Rizzo said Allstate increased auto rates in 15 states an average of 9.8% in March and has now implemented 53 rate increases in 41 locations averaging about 8.2% since the start of the fourth quarter. Additionally, Allstate’s National General brand increased auto rates an average of 3.8% in seven locations in March.

Last month Allstate addressed the topic of auto rate hikes. Glen Shapiro, president of property-liability, said auto-claim frequency remained below pre-pandemic levels even though miles driven increased, but claims from non-rush-hour accidents have returned to historical norms. Repair costs have increased due to supply-chain delays and higher labor costs.

Rate Hikes, Telematics, Data Science Leading Allstate Back to Profit

In the latest statement, Rizzo said Allstate continued to see “the impact of elevated severity inflation in the current report year” with incurred severity estimates to increase by 11% for property damage and 8% for bodily injury.

All Allstate brand auto insurance rate increases totaled $862 million in the first quarter 2022 after $702 million of rate increases in the fourth quarter 2021, Allstate said.

Allstate also said first-quarter catastrophe losses totaled $462 million pre tax. Catastrophe losses, which primarily included tornado and wind losses from Texas and the southeast, were $227 million March.,