Allstate’s Plan to Return to Profit in Auto  February 7th 2023

Allstate’s Plan to Return to Profit in Auto

Following a year of turbulence in its auto insurance business, Allstate Corp. outlined what CEO Tom Wilson called the company’s number one priority: improve margins. Allstate ended 2022 with an unprofitable 110.1 combined ratio in auto – 112.6 for the fourth quarter when it recorded $974 million in underwriting losses.

Allstate Reports $310M Q4 Loss as Auto Claims Costs Motor Past Rate Hikes

Mario Rizzo, president of Allstate Property-Liability, told analysts and investors during a conference call on earnings that the leading auto insurer has a four-legged approach to restoring profitability: continue raising rates, reduce expenses, stricter underwriting, and modifying claims practices to reduce costs.

“We expect to continue to pursue significant rate increases into 2023,” he said, adding that Allstate “temporarily reduced advertising spend to manage new business volume,” and has restricted underwriting in “locations or risk segments where we cannot achieve adequate prices for the risk.”

Mario Rizzo, president of Allstate Property-Liability

In addition, to keeping loss costs down, the segment leader said Allstate has partnerships with suppliers and repair facilities, and is using predictive modeling to “optimize repair versus total-loss decisions and likelihood of injury and attorney representation.”

Rizzo said Allstate has “meaningfully reduced” pending bodily-injury claims by about 20% over the last year.

Allstate executive talks moving their global workforce to remote work in a weekend

The transition to remote has been a long, arduous process for most companies, with many still struggling to do so post-pandemic. But for Allstate, it was barely 48-hours long. 

In March of 2020 — like so many organizations — the insurance company moved 95% of its global workforce to remote work in a single weekend. Since, they've seen continued success with remote-first strategies and have continued to invest in the setup, even selling some of their physical office spaces and investing in new roles and tools.

"We sent everybody home in 2020, and in 2021 we took another look at how we were being successful. We started by going out to our employees and asked them what their preferences were in terms of working: did they want to work remotely? Did they want to work hybrid? Did they want to come into the office?"

Stephanie Roseman, vice president of people solutions and experiences at Allstate. "

Industry Trends to Exploit for 2023

Agency owners must watch and learn about major trends when they start. Following are the eight key trends that insurance agencies should be tracking for 2023.

Insurtech will continue to be the shiny object that gets much attention but might not live up to the hype. The common trope is that the insurance industry is facing its most profound disruptions in decades through artificial intelligence (AI), machine learning, the internet of things (IOT), blockchain, data analytics and other emerging technologies. Yes, those things are happening, but a “profound disruption” is hyperbole. So many new companies call themselves “insurtech-based,” but scratch the surface, and it’s more or less standard business operations.

Collaboration, integration frame first Big 'I' InsurTech Summit

On-stage conversations during the recent Big ‘I’ Insurtech Summit held in Savannah, Ga., in late January underscored a common theme around insurance technology recently: The idea that insurance will be “disrupted” by one or even a collection of startups has given way to the reality that agents, carriers and technologists can do more by working together.

The event included a 90-minute program with two panel discussions on the state of technology adoption in insurance and where the industry may be headed now that digitalization has taken hold.

“We all know that insurtech is impacting our industry [for] agents, brokers and carriers,” Big ‘I’ President and CEO Bob Rusbuldt said at the outset of the event. “It is changing our industry rapidly and in significant ways.”

Podcast – Nigel Walsh: Managing Director of Insurance, Google: The $25 billion start-up

This week we are talking to Nigel Walsh, Managing Director of Insurance, Google, to learn about why Google launched its recent “start-up” - Google Cloud - $25 billion in valuation whilst revenue growth was 32% for Q4 of 2022. Nigel is well known for his love of insurance and engagement across a whole range of innovative topics.

He relocated to the US from the UK last year so we get a perspective of how attitudes, and technology, vary on both sides of the Atlantic.

Topics include:

• What’s changed since the phrase “Insurtech” was invented 7 years ago
• Are insurers returning as investors with a fresh appetite for innovation
• Predicting the future and scoring past forecasts

Pedestrian crash test dummy promises a more realistic target

A robotic dummy, complete with articulated limbs and a realistic stride, has been unveiled as the latest tool for testing how advanced driver assistance systems (ADAS) can safely interact with pedestrians.

AB Dynamics has hailed its Soft Pedestrian 360 as a “next-generation pedestrian ADAS target developed to significantly decrease the time and cost of testing while offering greater realism.”

Pedestrian detection has proven to prevent injuries to people on foot. The Insurance Institute for Highway Safety (IIHS)’ Highway Loss Data Institute reported in 2018 that Subaru EyeSight (which has pedestrian detection with auto brake) cut Subaru-versus-pedestrian claims by 35%.

And of the 731 ADAS-related crashes recorded by the National Highway Traffic Safety Administration since July 2021, just two involved pedestrians.

However, one high profile case has raised concern over whether technology can be trusted to keep pedestrians safe. Tesla was the subject of a civil lawsuit, and investigated by U.S. regulators following the 2018 death of a pedestrian hit by a Model 3 suspected to be on autopilot..

Claims review 2022: Low losses with a large exception

One of the main drivers of the price of insurance is the number of claims that are made against an insurance policy in any given year.

Without stating the obvious too much, claims influence the price of insurance in two ways. Firstly, there is the direct influence: if there has been a claim against an individual insurance programme, the price is likely to go up unless the insured can clearly show that they are taking steps to ensure that a similar claim doesn’t happen again. Even then, depending on the nature of the claim, the price of insurance can remain inflated for several years as insurers looks to recoup their losses.

SEC Considers Easing Climate-Disclosure Rules After Investor Pushback

The Securities and Exchange Commission is considering a softening of planned rules requiring companies to disclose the effects of extreme weather and other costs related to global warming when the regulator completes its climate-change proposals, people close to the agency said.

The Wall Street regulator is looking again at the financial reporting aspect of the climate-disclosure plan it issued last year, following pushback from investors, companies and lawmakers, the people said.

The final version of the SEC rules, expected this year, will likely still mandate some climate disclosures in financial statements, according to the people close to the agency. But the commission is weighing making the requirements less onerous than originally proposed, the people said, such as by raising the threshold at which companies must report climate costs.