At a Goldman Sachs conference earlier this month, the CEO of Allstate, Tom Wilson, said Allstate needs to raise auto insurance rates by 30+ percent in California and New Jersey. New York increases need to be about 18 percent.
Thankfully these rate increases did get approved in all three states. The California approved change was 30%, New York was 14.6%, and New Jersey was 20%. If these price increases hadn’t been approved in these states, Allstate was going to have to cancel plans of some existing customers.
Here’s a quote from Wilson shared in a recent Insurance Journal article:
“If we don’t get price increases approved this year in those states, we’re going to move from just not taking on new business to having to say goodbye to some existing customers. We don’t want to do that. I think regulators would prefer we not do that. We’re not threatening anybody. We’re just saying we can’t afford to lose that much money in those three states.”
He went on to say, “When you look forward next year, either we’ll be successful and we’ll get the kind of rate increases we need to get us back to the margins we want, or we’re going to get smaller in those states.”
This is the unfortunate reality of the industry (and the economy as a whole) right now. Insurance companies have to be profitable to stay in business and keep providing insurance. The department of insurance in California has to approve rate increases for insurance companies, and this has been an issue in the past with home and property insurance. Thankfully these rate increases were approved. If they had not been, it’s likely even more insurance companies would be leaving the state and canceling existing policies.
I’m sure you’ve felt the impact of inflation as a consumer. Your insurance rates have probably gone up. It’s not just your individual auto insurance rates that have gone up; it’s happening to everyone. These rates need to be able to be adjusted by the insurance companies or we risk cancellations in other lines of insurance – like auto insurance – similar to what we’ve seen in California with home and property insurance. It’s painful to deal with rate increases, but it’s much better than being uninsured or unable to get insured.
If you have questions about your insurance policies, rates, or whether moving to another insurance company is a good idea, reach out to us anytime.