Author: Terry Gangcuangco
Original article here, February 23, 2024
Allstate and State Farm, both based in Illinois, are said to be raising their homeowners' insurance rates in the state by double digits.
Citing the insurance giants’ respective state filings, a Chicago Tribune report said Allstate’s 12.7% hike is being rolled out this week, while State Farm’s 12.3% increase will take effect on different dates – March 15 for new business; May 15, renewals.
In terms of dollar amounts, Allstate’s adjustment will mean an additional $237 per year on top of the average annual premium; for State Farm, around $138.
It was noted that, across the country, the cost of home insurance has gone up by 23% since January last year.
Shannon Martin, an analyst at personal finance website Bankrate, was quoted by the publication as saying: “Insurance is reactionary, so even though inflation is currently slowing down, when we experience losses, insurance companies pay for them, and everything’s at a premium.
“They’re trying to recoup their losses and adjust the rates accurately for future losses.”
Earlier this month, Allstate published its estimates of catastrophe losses for January 2024.
“The Allstate Corporation announced estimated catastrophe losses for the month of January of $276 million, or $218 million after tax,” the insurer said at the time.
“Estimated January catastrophe losses of $325 million were primarily driven by two events that comprised approximately 80% of the losses, partially offset by favorable reserve re-estimates for prior events.”
In terms of auto insurance rates, Allstate plans to pursue rate increases in 10 states after implementing hikes in California, New York, and New Jersey last December.
Allstate CEO Tom Wilson told the Tribune: “We still lost money on auto insurance last year. So, it wasn’t that we were raising the prices and going to the bank.”