Allstate recently reported its auto underwriting profit more than doubled last year to a lot more than $3.4 billion, despite having to absorb higher severity and refunds to policyholders.
The profitability stemmed at least partly from the 29.1 % decline in gross auto property damage frequency.
“Insurance underwriting margins continued to be over the prior year, reflecting fewer auto accidents and powerful homeowners insurance results,” CEO Tom Wilson said in a statement Feb. 3.
More Americans staying home this past year amid the COVID-19 pandemic cut the odds motorists would get into a car crash. However, this reduced congestion is also thought to have increased severity, for the drivers still while using roads found themselves in a position to reach higher speeds and crash more dramatically.
Allstate said its gross auto property damage frequency dropped 29.1 percent, but severity climbed 10 % in 2021.
“Allstate acted quickly and led the industry in taking care of customers throughout the pandemic by providing two Shelter-in-Place Paybacks, financial flexibility through Special Payment Plans and offering free identity protection in 2021,” Allstate wrote in a news release Feb. 3.
In a Feb. 22 10-K, Allstate reported it gave out $948 million in Shelter-in-Place Paybacks “as the significant decline within the number of auto accidents contributed favorably to the underwriting results.”
Allstate’s overall auto losses fell by a lot more than $2.27 billion. The company’s auto expenses unrelated to claims only rose by a lot more than $1 billion, a statistic that Allstate’s 10-K indicates would come with the $944 million in premium paybacks.
The shelter premium rebates raised Allstate’s auto expense ratio by 3.8 points, as the reduced claims helped cut the company’s auto loss ratio 10.7 points to 57.5. That means 3.8 cents of each and every premium dollar was refunded to customers in 2021, while Allstate needed to pay out 10.7 cents less in claims and claim-related expenses of computer did in 2021. Overall, Allstate kept $0.14 of every $1 in auto premiums in 2021, when compared with $0.07 in 2021.
“Amidst the 2021 pandemic, Allstate served customers well, made progress in building higher growth business models and generated excellent returns for shareholders,” CEO Tom Wilson said inside a statement. “Customers received excellent service, reductions in premiums and greater use of a broad range of protection.”
Allstate’s average auto gross written premium premium rose from $603 to $617. It had a lot more than 21.91 million auto policies in effect in 2021, compared to more than 21.88 million in 2021.
