By Clare Fonstein, SAN FRANCISCO CHRONICLE
https://www.sfchronicle.com/climate/article/allstate-car-insurance-18665199.php#
After pausing its direct sale of auto insurance policies in California, Allstate is back, but with higher prices for customers.
Allstate’s sale of auto insurance policies, via its website or phone, resumed early this month but with an average rate increase of 30%. Some people will see increases as small as 10% and others will be hit with rates going up as much as 55%, according to a California Department of Insurance spokesperson.
Allstate is the third largest insurer for private passenger auto physical damage and private passenger auto liability in California.
“This auto insurance rate approval allows us to protect more customers as we work with the California Department of Insurance to improve insurance availability,” Allstate wrote in a statement.
The company did not immediately address whether the rate increase was applicable to Allstate subsidiaries.
The insurer paused direct sales — made online and by phone — of new auto insurance policies last year, though people could still get policies through agents. Allstate did not immediately clarify what proportion of its policies were direct sales.
Jay Zemansky, president of Santa Rosa based Sadler & Company Insurance Brokers Inc., said car insurance policies are getting more expensive across the board, but Allstate’s price jump was dramatic.
“Normally you see 2, 3, 4, maybe 5% (increase), but this is unheard of,” he said.
Allstate said its payments to customers recovering from accidents and disasters significantly increased over the past few years, and “we need to adjust rates to reflect the cost of providing the protection our customers depend on.”
State Farm Auto is raising rates 21% starting this month, according to the San Francisco Standard (opens in new tab). In April, GEICO Auto will also increase rates 12.8%, the Standard reported. Overall in California, the average annual car insurance premium went up about 18% from 2023 to 2024, according to Bankrate.com.
Zemansky was unsure whether rate increases similar to Allstate could become the norm for car owners. He said that similar to the homeowners market, the number of options is shrinking.
“Because so many companies have stopped writing any new businesses or (are) leaving the state, (the future of auto insurance pricing is) thrown up in the air and you don’t know where everything’s going to fall down and land,” Zemansky said.
Allstate originally requested an average rate increase of 35% but eventually was approved for a 30% rate increase with some stipulations, including that it would end the pause, according to the California Department of Insurance.
Consumer advocacy group Consumer Watchdog submitted an analysis to Allstate stating it should only be receiving a 26.3% rate increase, according to Consumer Watchdog’s founder, Harvey Rosenfield.
“We try to get the increase to as low as we can, obviously not jeopardizing Allstate’s ability to do business in California,” Rosenfield said.
He said he felt good about what Consumer Watchdog was able to get with the intervention.
Allstate also recently increased auto insurance rates in New York and New Jersey by 14.6% and 20% respectively, according to the company (opens in new tab).
Along with auto policies, in 2023 Allstate also paused new homeowner, condominium and commercial insurance policies (opens in new tab) in California. That pause is ongoing.
