Geico And Allstate To Raise Premiums
Famous for their advertisements that state the company saves customers 15% in 15 minutes, Geico has said it is raising auto premiums following disappointing underwriting results in the first quarter of 2015. Geico’s underwriting profit for that period was $160 million down from $353 million from the same period in 2014.The company also reported more claims and claims that were more severe in several major coverage areas, with its loss ratio increasing to 80.1 as opposed to 75.8 in 2014.
Premiums written by Geico underwriters totaled $5,886 in the first quarter of 2015, an increase of 10.2%. A the same time, losses and lost adjustment expenses increased 16.6%, while underwriting expenses jumped 9.5%. SNL Financial has stated that Geico is the biggest spender out of any American property and casualty insurer, paying $1.18 billion in 2013 for advertising.
Even though it experienced a 13% increase in first quarter profits, Allstate the largest publicly traded auto and home insurer in the United States has indicated it will also raise auto premiums. Allstate’s underwriting income from its auto division fell 48% during the first quarter to $144 million. Tom Wilson, Allstate CEO, indicated that accidents have increased because economic activity has increased with the improving economy. Premium hikes planned for late 2015 have been implemented earlier.
According to SNL, Geico is the second largest vehicle insurer in the United States behind State Farm. In 2013, Geico had approximately 10.4% of the market share, a figure that company executives believe has grown to 10.8%.
During 2014, Geico reported writing premiums worth approximately $21 billion, a figure 9.8% higher than the previous year. Its loss ratio for 2014 was 77.7, while underwriting expenses increased to $3.4 billion.