Auto Insurance Market Stays Rational Despite Improved Trends, Says Allstate

Allstate Corp. CEO Tom Wilson said he does not expect auto insurers to get more aggressive on pricing as the industry’s increases seem to have leveled off.

For the most part, Wilson explained to analysts during a call to discuss first quarter earnings, insurers seem to be where they need to be from a profitability standpoint in the auto line, but he doesn’t see insurers losing any discipline because each are looking to maintain profitable growth.

“I don’t see us headed into sometimes what you see in the commercial market—soft markets where people are chasing volume by lowering rates.” Wilson said. “I don’t see us moving into an aggressive rate reduction.”

Wilson said there has been a slowdown of rate increases in auto insurance compared to 2022 and 2023, although “one of the large competitors is still a bit lagging, taking large price increases.”

There was a time not so long ago that Allstate released monthly reports of its auto rate increases—more than 40% over the last several year—as it tried to restore profitability to the line, struggling to keep pace with claims costs. But earlier this year, the Northbrook, Illinois-based insurer declared that it had reached profitability targets in auto. Allstate’s auto segment turned in an underwriting profit of $1.8 billion for full year 2024, reversing a loss of $1.1 billion the prior year.

Related: Allstate to ‘Lean Into’ Turnaround in Auto Business, and Grow

Allstate in the first three months of 2025 continued its momentum in auto by recording a 132.5% increase in underwriting income to $816 million, while the combined ratio improved 4.7 points to 91.3.

Related: Allstate Q1 Income Drops 52% on Record $3.3B Gross Catastrophe Losses

During the May 1 call, Allstate’s Mario Rizzo said the auto insurance market has seen a moderation in physical damage severity as well as favorable frequency.

“I think that’s improved margins broadly, and I think the competition has leaned into growth more heavily certainly as margins have improved,” said the president of property-liability. “But, I would still characterize it as a rational market from a pricing perspective.”

Wilson said new business is growing but retention “lags much as the way it lagged on price going up,” because of various timing issues related to the price increases Allstate need to install.

Retention has stabilized, and some of that is due to less rate activity but, regardless, Allstate is “not waiting for [less rate increases] to improve retention,” Rizzo said. The insurer is looking to agents to engage with customers to improve the buying experience to “make sure that they’ve got the right coverage, the right discounts, things like deductibles and so on, and they can get the best possible price from us, which we believe will help retention,” he said.

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