Allstate Responds to Georgia Insurance Department’s Rate Filing Investigation

Allstate Insurance Co. is speaking out about an investigation by the Georgia Department of Insurance into the carrier’s plan to raise auto insurance rates for some in the state by at least 25 percent.

In a statement to Insurance Journal, Allstate spokesperson Daniel Groce said the rate changes are justified, but the company will cooperate with the state’s investigation. The insurers filing for an overall statewide automobile rate increase of 25 percent will be implemented on May 22, 2016.

“We work closely with state departments of insurance whenever we adjust our rates, and look forward to a continued dialogue with the Georgia Department of Insurance,” Groce wrote in an e-mail.

Georgia Insurance Commissioner Ralph Hudgens announced in a consumer alert April 11 that he had directed department staff to initiate a professional level examination of Allstate’s auto rate filing to determine if the rate increase is defendable under state law. Hudgens said in the alert to policyholders that the 25 percent figure is only an average rate change for the entire state, and that many policyholders should be prepared to see a rate change as high as 58.3 percent.

“I am deeply concerned about this filing and the impact it could have on consumers,” Commissioner Hudgens said. “Georgia law prohibits me from stopping or delaying this increase unless an actuarial examination proves the rate to be legally excessive.”

Allstate said that rate adjustments are made “very carefully to charge properly for the risk we assume and ensure our ability to protect customers from life’s uncertainties,” Groce said.

Groce added that this particular rate filing applies to one of Allstate’s three underwriting companies in Georgia and represents less than half of its insurance business in the state. The Allstate Group of companies is the second largest automobile policy provider in Georgia. As of Dec. 31, 2015, they held a market share of 11 percent of all Georgia automobile policies.

Groce said that as is industry standard, changes in market conditions require the company to set rates that are adequate for the coverage provided.

“Increases in the number of miles driven, the amount of traffic fatalities, and the costs associated with repairing vehicles have caused the insurance industry to experience a significant increase in both the number of claims received as well as the cost associated with settling these claims,” Groce said. “We encourage all our customers to regularly consult with their Allstate agent about the most appropriate coverage and available discounts for their particular circumstances.”

Hudgens said April 11 if the results of GADOI’s examination show that the filing cannot adequately support the increase, he intends to take every measure allowed to him by law to protect policyholders.

“Georgia adopted a ‘file and use’ system in 2008 to promote competition and lower rates among insurance companies,” Hudgens said. “This rate filing appears to promote neither.”