Allstate Insurance Sets Trend for Higher Rates Among Major Insurers
Allstate Insurance announced some time ago that it planned to take a number of steps to raise the home insurance ratesÂ of its customers. Now,Â company executives say they believe other major insurers plan toÂ follow itsÂ lead by increasing their own customers’ premiums.
Allstate Insurance Raises Home Insurance Premiums
In February, AllstateÂ InsuranceÂ CEO Thomas Wilson announced plans for his company to increaseÂ profitsÂ and offset rising claims costs afterÂ a few hard years of natural disastersÂ byÂ raising home insurance rates.
One approachÂ AllstateÂ has taken toÂ raise rates is aÂ newÂ product calledÂ House & Home, whichÂ pays customers who make roof claims on their homes the “actual cash value” if the home is older than 10 years, rather than offering the amount needed for replacement.
The company said ifÂ the homeowner wants a new roof, they will have to cover the cost above the old roof’s depreciated value on their own. They can also purchase a rider that will pay for the cost of total replacement, but of course, theyÂ will have to pay more for this coverage.
Rivals to Increase Home Insurance Rates to Compete
Despite opposition from consumers who don’t want to see an increase in their home insurance rates, Allstate has made clear it plans to continueÂ hiking costs.
So far, the company is sure it has made the right decision. In fact, this week, Allstate Corp. executives announced that the company saw first-quarter profit margins in the ballpark of 33 cents on the dollar.
Now, Allstate Insurance executives say that rival insurers are also starting to raise home insurance rates.
Matthew Winter, the head of Allstate’s home andÂ auto operations,Â shared with the Wall Street Journal when it comes to raising rates, “My expectation is that we will no longer be alone in the marketplace.”
However, he did not disclose which insurers are likely to join the company’s ranks in the near future.