Allstate back in business in California after state approves auto rate hike

The Allstate Corp. is writing insurance policies again in California after state officials approved a long-awaited rate increase.

The Golden State's regulator granted a 30% increase in private auto rates in December 2023, Mario Rizzo, president of property and liability, said during an earnings conference call. Allstate originally submitted a request for a 35% hike in May.

Allstate received the approval before its expected effective date and met its "full rate need," Rizzo said.

"As of [Feb. 7], we're writing business in California, again, across all channels, and we feel comfortable writing business in California, given the rate level that we're operating at," he said.

California was one of three states, the other two being New Jersey and New York, where Allstate had significantly scaled back new business. CEO Tom Wilson went further during the third-quarter call in November 2023, saying that it would further shrink its footprint in those states if its requested rate increases were not addressed by the end of that year.

New York, New Jersey still on pause

Allstate received a private auto rate increase of 17% in New Jersey, but that was far below the 29% hike it requested. Allstate will continue to reduce its presence in the Garden State while continuing to file for further increases, Rizzo said.

"We have rate pending with the New Jersey [regulator] and depending on how those things shake out, that will form future actions we take in New Jersey," Rizzo said. "But as of right now, we will continue to get smaller in New Jersey given the lack of rate adequacy."

The same scenario is looming in the Empire State, where Allstate received a 14.6% increase, which fell short of a 18.3% hike request. Rizzo said the approved increase helps, but more rate is needed.

"Depending on how that plays out, that will form the next set of actions we take in New York," he said.

New York, New Jersey and California continue to pressure Allstate's underwriting performance. The three states had an underlying combined ratio of 119.5% in 2023, while the ratio was 95.9% for the other states Allstate covers.