News
Allstate faces national class-action lawsuit over data collection
A major challenge in a case like this is getting the class certified, says an attorney close to the case.
The class action brought its claims under the Federal Wiretap Act, the Computer Fraud and Abuse Act and invasion of privacy. Morgan & Morgan and Clifford Law Offices filed a class action against Allstate Insurance Co. for allegedly unlawfully collecting and selling data from more than 45 million consumers to raise premiums.
The consumer class action comes on the heels of Attorney General Ken Paxton's enforcement action against Allstate and its subsidiary Arity LLC under the Texas Data Privacy and Security Act, which was filed Jan. 13, 2025, in Montgomery County, Texas.
The Texas state action and the class action both allege Allstate created software on third-party apps to collect data on consumers' driving behavior without their knowledge. In addition, the data was sold to other insurance companies and used for Allstate's underwriting purposes to raise prices, the suits alleged.
The class action was filed in the Northern District of Illinois, and goes further than the claims on behalf of Texas consumers in the state action to encompass a national class.
"The approach here is to advance the interest of all consumers who used upstate as its insured," said John Yanchuynis of Morgan & Morgan. "The class action device, particularly here, allows us to do that."
Yanchuynis said the case may call for fresh thinking about exactly what constitutes damage.
"Sometimes, the harms are not as ascertainable," he said. "So, you have to be better at describing how when information is taken, despite the absence of consent by the consumer, what the effect of that means. One, it's a violation of our freedom of choice, but also, people's information here was harvested without their consent and knowledge for the use by an insurance company to price its product."
North Carolina home insurance premium base rates increasing about 15% by mid-2026
Base rates for North Carolina homeowners' insurance premiums will increase on average by about 15% by mid-2026 as part of a settlement reached by the state Insurance Department and the industry. The agreement announced Friday by state Insurance Commissioner Mike Causey contrasts with the January 2024 request by the North Carolina Rate Bureau, which represents insurance companies, seeking a 42.2% overall average increase. Causey, an elected official who began his third term earlier this month, formally rejected the bureau's request last year.Base rates for North Carolina homeowners' insurance premiums will increase on average by about 15% by mid-2026 as part of a settlement reached by the state Insurance Department and the industry.
The agreement announced Friday by state Insurance Commissioner Mike Causey contrasts with the January 2024 request by the North Carolina Rate Bureau, which represents insurance companies, seeking a 42.2% overall average increase.
Causey, an elected official who began his third term earlier this month, formally rejected the bureau's request last year. That led to a formal hearing that began in October and included multiple weeks of witnesses, evidence and arguments. The state Insurance Department said its witnesses would contend rates should be lowered or increased by less than 3%.
Except for the settlement, a hearing officer — in consultation with Causey — would have decided what the new rates should be. The Rate Bureau could have appealed that decision in court.
Causey said in a news release that the proposed rate increases “are sufficient to make sure that insurance companies, who have paid out large sums due to natural disasters and face increasing reinsurance costs due to national catastrophes, have adequate funds on hand to pay claims."
The bureau attributed its large request to high inflation — particularly on building materials — combined with calamitous storms and “severely inadequate” premium rates to cover claims. The bureau’s requested increases had varied widely from just over 4% in parts of the mountains to over 99% in some beach areas.
Commentary/Opinion
APCIA responds to Treasury Department report on homeownership costs
The American Property Casualty Insurance Association (APCIA) has issued a statement in response to the US Department of Treasury’s Federal Insurance Office report highlighting key factors affecting homeownership costs and insurance availability.
The primary driver of rising homeownership costs is inflation, particularly the increased cost of construction materials and labor, according to APCIA president and chief executive David Sampson (pictured). Over the past five years, construction costs have risen by 37.4% while homeowners’ insurance costs have only increased by 22.4%, based on data from the Bureau of Labor Statistics.
Sampson also pointed out that many new homes are being constructed in areas more prone to natural catastrophes, citing California’s growth, where over two million homes have been built in regions with high wildfire risk. Despite this, necessary wildfire mitigation improvements have not been fully implemented.
“Insurance is still a relatively small percentage of homeownership costs compared to average property taxes, utilities, and mortgage loans,” said Sampson.
Los Angeles Wildfires
Insurance groups urge passage of forest management bill
Several major insurance trade associations wrote to lawmakers Friday urging them to pass the Fix Our Forests Act, which includes various provisions intended to prevent wildfires and was reintroduced to the U.S. House of Representatives Thursday.
H.R. 8790, which is opposed by environmental groups, was passed by the House last year but failed to progress in the Senate.
It is cosponsored by Republican Rep. Bruce Westerman of Arkansas, chair of the House Natural Resources Committee, and Democratic Rep. Scott Peters of California.
In a letter of support, the American Property Casualty Insurance Association, Independent Insurance Agents & Brokers of America, National Association of Mutual Insurance Companies and Reinsurance Association of America said in a joint statement that the measure would increase the United States’ resilience to wildfires, improve land use planning and forest management, and protect wildfire-prone communities.
The legislation proposes, among other things, designating fireshed management areas to prioritize forest management, establishing a “Fireshed Center” to encourage collaboration between federal departments and others, allowing targeted grazing on federal land, and implementing measures to reduce litigation that delays forest management projects.
“We strongly support provisions to reduce the fuel loads in our nation’s forests, to harden utility infrastructure and improve rights-of-way against wildfire by encouraging more active management and removal of hazardous trees, as well as fostering new markets for innovative new products that could facilitate the reduction and utilization of fine fuels,” the insurance groups wrote.
State Farm won’t drop coverage of LA County wildfire victims
In the wake of California’s largest ever wildfire event, the insurer decided to change course on policy renewals.
In wake of the deadly wildfires impacting Southern California, State Farm is pausing non-renewals for homeowners, rental dwelling and residential community association policies in Los Angeles County.
The decision, effective as of Jan. 7, 2024, comes after the state’s largest insurance company announced in March 2024 that it would withdraw coverage of 72,000 home and apartment policies — citing inflation, regulatory costs and rising catastrophe risk for the move.
“We are focused on our customers and helping them recover from the largest fire event we have ever experienced in the state,” State Farm said in a statement sent to PropertyCasualty360.com. “Our claims force is the largest in the industry and we are bringing the full scale and force of our catastrophe response teams to help customers recover – whether they are on the ground in LA or across the country. As of Jan. 17, we’ve received over 8,300 home and auto claims and have already put well over $50 Million back into customers’ hands."
State Farm insures 250,000 homes and 880,000 automobiles in LA County. The company insures over one million homes and more than four million autos across the state.
LA wildfires thrust insurance startup into spotlight as property owners scramble for protection
Midway through December, tech entrepreneur Dan Preston debuted insurance startup Stand's first product focused on protecting property in wildfire zones. He should have had months to work with prospective customers and to market the offering before any catastrophic fires hit the U.S.
In California, Stand's home state, fire season normally lasts from early summer through October or November. Stand, which Preston co-founded early last year, announced a $30 million financing round and the new product on Dec. 16, a few days before the official start of winter.
But it's been a winter like no other. Three weeks after Stand's launch, wildfires ravaged parts of Los Angeles, killing more than two-dozen people, scorching about 41,000 acres due to extreme winds and destroying at least 12,300 structures.
"This is certainly not a time you would normally see events like this," Preston said in an interview this week. "It has put an accelerant on business in a pretty massive way. As soon as this stuff started happening, the inbound demand was about 5-10x overnight."
Preston has been trying to innovate within the typically boring and slow-moving insurance industry for well over a decade. In 2013, he became technology chief at auto insurance upstart Metromile, and later took on the role of CEO, guiding the company into the public market in 2020 through a special purpose acquisition company (SPAC). Metromile hit a rough patch after its SPAC and sold to tech-powered insurer Lemonade in 2022. Preston stayed on at Lemonade for another year.
State Farm pulls Super Bowl ad due to California fires
Insurance giant State Farm has canceled a Super Bowl ad that was set to air during the big game in February, in part, it said, over the raging wildfires in California.
“Our focus is firmly on providing support to the people of Los Angeles. We will not be advertising during the game as originally planned,” a spokesperson said in an emailed statement to The Hill on Friday.
The insurance company said it is serving over 8 million customers in California and added that its agents and other employees “are all focused on helping customers impacted by the Southern California wildfires in the midst of this tragedy.”
In 2022, the average cost of the Super Bowl LVI 30-second commercial was $6.5 million, according to a 2024 report from market research firm Kantar. The cost for those ads in 2024 was reaching $7 million.
State Farm said in the statement it has received more than 8,300 home and auto claims related to the Los Angeles fires and has “put well over $50 Million back into customers’ hands.”
Mercury yet to decide if LA wildfires a single event as claims paid hit $80m
Mercury General Corporation has paid $80 million to policyholders, mainly for living expenses and housing contents due to the Southern California wildfires. However, it has reportedly not yet decided whether it will treat the fires as two separate events under its reinsurance agreements.
Earlier this month, Mercury General provided a preliminary assessment of the wildfires, expecting losses to exceed its reinsurance retention level of $150 million.
In a new update today, the firm stated that it has already paid $80 million to policyholders primarily for living expenses and housing contents, and has started to pay out dwelling claims at the Coverage A limit for verified total losses.
At the same time, Mercury General said it has sufficient liquidity to meet the increased levels of payments, and that its catastrophe reinsurance treaty allows for the combining of events that occur within a 150-mile radius as a single occurrence.
“If each individual event is classified as its own catastrophic event by the Property Claims Service (PCS), a unit of the Insurance Services Office, each event can be considered a separate occurrence. In the case of the Palisades and Eaton wildfires, the PCS has designated each as a separate event,” the firm explained.
Mercury General also observed that as more information becomes available to it, including regarding any subrogation potential, the firm will evaluate whether it will consider the Wildfires as two separate events.
Under a two-event scenario, Mercury General suggested that it may elect to use reinsurance limits of up to $1,290 million for the first event and reinstated limits up to $1,238 million for the second event.
In this scenario, the Company would be responsible for the first and second event retentions of $150 million each, and up to a $101 million reinstatement premium for total retention and reinstatement premiums of $401 million. In addition, the Company would have co-participation up to $52 million for losses in excess of $650 million on the second event,” Mercury General said.
LA wildfires: 17,027 structures damaged or destroyed. Insured loss estimates avg $32.5bn
According to the latest official data from California fire authorities, the wildfires in the Los Angeles region have damaged or destroyed 17,027 structures so far, while the early insurance industry loss estimates from risk modellers average $32.5 billion.
Which would suggest an average insurance claim of around $1.9 million, although this would not leave any allowance for other claims vectors such as business interruption.
Analysts at investment bank Peel Hunt noted this morning that, “There is a risk that insured losses will increase further as the two main fires (Palisades and Eaton) are still not fully contained.”
With new red flag warnings for dangerous or extreme fire weather in place for the next few days, with officials cautioning of the risk of fires growing, there is a chance the damage increases further from these still burning fires.
It’s also worth noting that official data that now states 17,027 structures were damaged or destroyed by these two wildfires may rise whether the burns worsen or not, as the analysis of impacts continues at this time.
“It is still unclear what proportion of insured losses will be retained by insurers in the admitted market, how much exposure has been transferred to the E&S market in the past few years, and what will be picked up by the reinsurance industry,” Peel Hunt’s analyst team said.
Recommended Events
InsurTech Slopes 2025 (Founders and Investors Forum) Tue, Feb 4, 2025 at 1:00 PM
InsurTech Slopes is a two day event designed to bring together a small, diverse group of InsurTech investors and startup founders.
Date and time:: February 4 · 1pm - February 5 · 5pm MST
Location: Antlers at Vail, 680 Lionshead Place Vail, CO 81657
Event Description:
The InsurTech sector continues to thrive, creating opportunities for investors and entrepreneurs to capitalize on one of the world’s largest industries. Success begins by combining the right knowledge with the right talent.
Continuing on from the success from the first ever InsurTech Investor and Founder Forum in 2022, this two day event will bring an exclusive and diverse group of InsurTech investors and startup leaders to discuss various topics critical to successful startup growth while establishing connections between resources and opportunities.
2025 PREDICTIONS
State of Auto Insurance in 2025 - ValuePenguin
Car insurance prices are expected to increase an average of 7.5% in 2025.
That's a significant slowdown from the past two years, when car insurance rates rose an average of 16.5% in 2024 and 12.0% in 2023.
The average cost of car insurance nationwide in 2025 is $175 per month for full coverage. Nevada, Florida and Michigan are the most expensive states in the U.S. for car insurance, all with prices exceeding $250 per month.
Sustainability and ESG investments will keep expanding under Trump, analysts say | S&P Global Market Intelligence
The market for sustainability funds is consolidating amid regulatory and political pressures, but energy transition investments are set to continue.
The coming energy policy shift under President-elect Donald Trump and new regulations overseas are prompting investors to be more cautious, but they will likely have a limited impact on the sustainable investment market in 2025 and beyond, analysts and financial firms predicted.
Funds seeking to capitalize on energy transition opportunities while hedging climate-related risks face market uncertainty in the US. Those with operations in Europe must also contend with stricter taxonomy regulations for any investments with an environmental, social and governance label.
Such pressures will accelerate closures and consolidations of ESG funds globally, Hortense Bioy, head of sustainable investing research for Morningstar, said in an interview.
Mitchell: Vehicle complexity will continue to drive up severity, cycle times while claims volumes fall
According to research by Mitchell International, collision repairers will continue to face increasing vehicle complexity, rising claims severity, and longer cycle times.
Ryan Mandell, Mitchell’s auto physical damage division director of claims performance, reports that as vehicle values and the demand for new vehicles drop, total loss frequency increases — a trend that will likely continue this year.
“Total loss market values, on the other hand, will likely return to where they would have been historically if we did not have a massive disruption during COVID,” Mandell wrote. “In fact, by May 2025, the average total loss market value is expected to be 8.5% above historical average growth in the U.S. and 13.2% above historical average growth in Canada.”
As for overall claims volume, the reduction seen last year was caused by fewer collisions due to a mild winter rather than the growing availability of advanced driver assistance systems (ADAS), he added. Insurance affordability was also a factor.