GEICO, Allstate to Raise Auto Insurance Premiums
GEICO, which “everybody knows” saves drivers fifteen percent on auto insurance, said it will raise its auto premiums after underwriting results declined in the very first quarter.
The giant direct writer said its underwriting profit for the very first quarter was $160 million, a decline of $193 million compared to the very first quarter of 2014.
In the very first quarter of 2015, GEICO experienced increases in claims frequencies and severities in several of its major coverages and its loss ratio enlargened to 80.1, compared to 75.8 in 2014.
“As a result, we are implementing premium rate increases as needed,” the company said in its most latest SEC filing.
Compare affordable auto insurance quotes
Premiums written in the very first quarter of two thousand fifteen were $Five,886 million, an increase of Ten.Two percent compared to 2014.
Losses and loss adjustment expenses incurred in the very first quarter of two thousand fifteen were up 16.6 percent. Underwriting expenses were up 9.Five percent.
“The automobile insurance business is very competitive in the areas of price and service. Some insurance companies may exacerbate price competition by selling their products for a period of time at less than adequate rates. GEICO will not knowingly go after that strategy,” the management said in its year-end two thousand fourteen filing.
The company said that a result of “an aggressive advertising campaign and competitive rates,” voluntary policies-in-force have enhanced about thirty nine percent over the past five years.
According to SNL, GEICO spends more on advertising– $1.Legal billion in 2013- than any other property/casualty insurer and has been the largest spender for years.
Allstate Also
GEICO isn’t alone. Allstate, the largest U.S. publicly traded seller of auto and home insurance, said it too would be raising its auto insurance rates, even tho’ its first-quarter profit rose thirteen percent.
While profit improved in its homeowners business, underwriting income from auto coverage fell forty eight percent to $144 million.
“There are more accidents now over the last duo of years than there have been because economic activity has gone up” and more people are driving,” said Chief Executive Officer Tom Wilson. “We and other people have been raising our rates to account for that.”
Allstate said price increases in auto insurance originally planned for later in two thousand fifteen will be implemented sooner.
Insurer Rankings
GEICO was ranked the 2nd largest private passenger auto insurer, behind State Farm, in the United States in terms of premium volume in two thousand thirteen by SNL. According to A.M. Best data for 2013, the five largest automobile insurers have a combined market share of fifty two percent, with GEICO’s market share being approximately Ten.Four percent. Now, GEICO management said it believes that GEICO’s current market share has grown to approximately Ten.8 percent.
2014 Year
For the total year 2014, the auto insurer reported written premiums of approximately $21 billion, an increase of 9.8 percent compared to premiums in 2013. The increase was attributable to an increase in voluntary auto policies-in-force of 6.6 percent and enlargened average premium per policy.
The loss ratio for two thousand fourteen was 77.7 compared to 76.7 in 2013, while underwriting expenses in two thousand fourteen enlargened seven percent to $Three.Four billion. The increase reflected the enlargened policy acquisition costs. The expense ratio was 16.6 in two thousand fourteen and 17.Two in 2013.