Six months after Illinois’ largest car insurer boosted rates by 6 percent, the state’s second largest is following suit.
Allstate filed in January to boost rates for more than 70 percent of its auto policyholders in Illinois by 5.9 percent, according to a filing recently posted by the Illinois Department of Insurance.
The hefty increase is a bit of a surprise, as top executives told analysts a month ago that they planned to ease up on auto rate hikes nationally after two years of steep increases. Double-digit price hikes over the past two years have led to historically high levels of customer attrition for a company that has prided itself on retention even as it tends to be higher-priced than many competitors.
“To the extent we’re able to keep more moderate rate increases, at this point on, we believe customer disruption will be mitigated and we’ll be able to hold onto more customers,” Allstate President Matt Winter said Feb. 2 on a conference call.
Evidently, Illinois won’t be part of that trend to moderate rate-taking if it occurs.
The 5.9 percent increase follows a 6.9 percent hike last year and a pair of increases in 2015 that totaled 8.6 percent.
Late last year, Bloomington-based State Farm Insurance, by far the state’s largest car insurer, hiked auto rates in Illinois by 5.8 percent, its heftiest single increase in the state in 14 years.
Allstate Fire Casualty, Northbrook-based Allstate’s primary car insurance subsidiary in Illinois, has seen the number of policyholders in Illinois drop steadily over the past two years. What were 320,268 policyholders as of November 2015 are now 316,558 as of Jan. 19, according to state filings.
Meanwhile, State Farm’s auto insurance customers have grown slightly from 2.67 million as of October 2015 to 2.71 million as of September 2016, according to state filings.
Just about the same time Allstate was filing for its latest substantial auto rate hike, it issued a press release outlining plans to recruit 500 new sales people in the state. About 75 of those would be new agents, with most of the rest support staff for the new agencies.
Executives said in February they intend to begin recruiting for new agents throughout the country after a short lull because the opportunity didn’t seem attractive while rates were climbing so fast.
Two Allstate spokeswomen didn’t respond to requests for comment.
Auto rates are rising more than normal right now as insurers cope with rising claims costs due to higher numbers of accidents and elevated repair and medical costs. Many of the insurers are attributing the problems to distracted driving, as well as just a greater number of cars on the road as more people find work.
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