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Higher Auto Severity Problem causing Allstate to raise rates by an average of 7.8% over the last five months.

Last week during a special event, Mario Rizzo, CFO of Allstate, said that the auto insurer put through rate jumps that translated into $2.5 billion back in 2015 and 2016 when rising auto frequency damaged underwriting profits.

Now tackling an auto severity problem tied to the rising repair and replacement costs and social inflation, Allstate has achieved 41 rate increases averaging 7.8 percent each across 34 locations since the beginning of fourth-quarter 2022, which will bring $1.2 billion of additional estimated annual premium written onto Allstate’s books, according to Glen Shapiro, president of Allstate’s property-liability business, and Julie Parsons, chief operating officer. (The figures refer to the Allstate brand alone. Allstate also disclosed rate changes for the National General brand to investors but did not discuss them during the event.)

“Increasing rates is definitely core to restoring margins, but we can moderate the impact for customers through claims excellence and reducing expenses,” Shapiro said, echoing commentary from executives of Progressive early in March who repeatedly referred to “other levers” beyond traditional rate filings available to maintain profitability.

More here: insurancejournal.com/news/national/2022/03/25/659771.htm

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