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Allstate says auto property damage severity up 7.5% in Q1

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Allstate says auto property damage severity up 7.5% in Q1

received approvalin the first quarter to increase rates by $335 million annually, on top of the$1.1 billion of increases approved in 2015, Pat Macellaro, vice president ofinvestor relations, said on an earnings call.

Themove was part of a program the company undertook after combined ratio in theinsurance business began to rise due to increased frequency of losses andhigher severity per claim. To addresses those issues, the company alsoimplemented underwriting changes where it identified specific underperformingsegments of business and reduced expenses across the board.

Averagegross premium per policy increased by 4.8% in the first quarter versus theprior-year period. Allstate brand auto rate changes take six months to be fullyrecognized in average gross written premium while they take 12 months to fullyearn in, Macellaro noted.

Allstateauto property damage severity increased 7.5% in the first quarter.

"Continuedstress on the auto repair industry from higher industry frequency, the cost ofrepairing newer, more complex vehicles and a higher total loss volume hascaused steadily increasing claims severity," Macellaro said.