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3 big private auto insurers cut rates in H1; Allstate bucks trend

Three of the four largest U.S. private auto insurers cut rates on private passenger auto insurance policies, particularly in the South, during the first half of 2019.

After several years of hiking rates on its private passenger auto policies, Berkshire Hathaway Inc.'s GEICO Corp. subsidiary began seeking rate decreases in 2019. In May, S&P Global Market Intelligence reported that GEICO was cutting private auto premium rates as losses stabilized and underwriting profits returned for the sector's biggest players.

GEICO's auto rate cut in Texas was the most-impactful decrease during the first six months of the year, according to an analysis by S&P Global Market Intelligence. The insurer reduced rates by a weighted average of 1.8% in the Lone Star State, resulting in an estimated $52.6 million calculated decrease in written premiums. GEICO was the second-largest auto insurer in Texas in 2018, having written $2.97 billion in direct premiums that year. That represented a 13.1% share of the market.

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Regulators in Maryland also granted GEICO a substantial rate reduction. The insurer's business filings were approved March 7, and will affect roughly 550,000 policyholders. The estimated written premium impact of these filings was a $40.7 million decrease.

Overall, GEICO received approval to lower rates in 14 states in the first half of the year.

State Farm Mutual Automobile Insurance Co. trimmed rates in four states, Tennessee, Kentucky, Colorado, and Michigan, led by a weighted-average reduction of 4.8% in Tennessee that could result in a $43.9 million decline in written premiums.

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Progressive Corp. received approval for rate cuts that could lead to calculated drops in written premiums of more than $22 million across two states, Oklahoma and Michigan. Oklahoma regulators approved a 8.4% rate cut, which could result in a $22.8 million drop in calculated written premium.

Progressive slashed rates in 18 states and raised rates in five. Three of the five increases had a weighted-average change of less than 1%.

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On the other hand, Allstate Corp. raised rates across the U.S. The most-impactful change was an 8.4% hike in Michigan that could lead to a $68.3 million rise in written premiums. Allstate's largest weighted-average increase of 14.2% occurred in Oklahoma. In aggregate, the company hiked rates in 25 states.

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In the Northeast, the two most-impactful changes occurred in Connecticut and Massachusetts with GEICO. The insurer reduced rates in both states, resulting in an expected premium decrease of $18.1 million and $9.2 million, respectively.