While
Allstate celebrated a 13% increase in profits during the first quarter of 2015, the property/casualty giant suffered a 48% decline in underwriting income from auto coverage.
Allstate reported just $144 million in auto underwriting income in Q1, with a combined ratio of 96.8. The company plans to expedite planned auto insurance price increases – originally scheduled for later in 2015 – thanks to the increase in non-weather related auto losses.
Chief Executive Officer Tom Wilson attributed the downturn in underwriting profitability to changing economic factors, and stressed that Allstate will continue to invest in technology that can improve underwriting by tracking driver behavior.
“There are more accidents now over the last couple of years than there have been because economic activity has gone up,” Wilson said, connecting the improvement in the economy to an increase in driving.
“We and other people have been raising our rates to account for that.”
Indeed,
GEICO made headlines earlier this week after it announced it plans to charge drivers more for auto insurance following a decline in profitability.
Loss and loss adjustment expenses were up 16.6% at GEICO, while underwriting expenses increased 9.5%.
“As a result,” the company said in its SEC filing, “we are implementing premium increases as needed.”
Overall, Allstate’s net income increased to $677 million in the first quarter, up from $600 million. Its premium revenue in property and liability also increased from $7.06 billion to $7.43 billion.
On the homeowners front, Allstate recorded a combined ratio of 78.7 with $348 million in underwriting income.
