As Allstate Imposes 12% Car Insurance Hike, Company Announces Quarter Billion Dividend for Shareholders
As Allstate Imposes 12% Car Insurance Hike, Company Announces Quarter Billion Dividend for Shareholders
Michigan Drivers Pay More, Get Less While Investors Get a Pay Day
LANSING, Mich.—(May 25, 2022)—Just a few months after socking it to consumers with a 12% on average increase in rates, Allstate Insurance this week announced more than $250 million in dividend payments to Allstate investors. The $0.85/share quarterly dividend matches the first quarter payment to shareholders and appears to represent the largest per share dividend in company history.
“With inflation hurting so many people, Allstate is rubbing its profits in the face of Michigan drivers who are facing huge premium hikes,” said Doug Heller, an insurance expert who consults with CPAN. “It sure seems that Allstate prioritizes shareholders over policyholders.”
According to Allstate Fire and Casualty’s rate increase filing that the Michigan Department of Insurance and Financial Services (DIFS) approved on March 17, 2022, the company will charge its approximately 122,000 Michigan customers an additional $42.8 million this year. Among them, about 20,000 Allstate policyholders are facing rate hikes of more than 15%. Under the DIFS approved rate change, premiums are rising by $340 per policy on average. This overall increase accounts for a $4 average reduction for the Personal Injury Protection (PIP) portion of coverage that was promised to drive consumer savings after passage of the 2019 auto no-fault law.
Comparing Allstate’s “proposed average premium” calculated in the rate filing that was completed on January 8, 2019, with the same calculation for the new rates that began to roll out in March of this year, Allstate’s average premium in 2019 was $3,337 and is now $3,351.
Under the 2019 law changes to Michigan’s auto no-fault law, auto insurers were required to lower premiums for PIP coverage in response to a series of changes to the no-fault portion of auto insurance coverage. Those changes included:
Allowing insurers to sell policies with less PIP coverage than the traditional unlimited PIP protection that had been standard in Michigan for over 40 years;
A draconian 45% cut in catastrophic care reimbursement for crash survivors;
And a 56-hour/week cap on family provided attendant care.
The law also increased the amount of liability insurance that Michigan drivers are required to buy. The law placed no limits on rate hikes for that coverage, nor did it include any rate protection for uninsured motorist coverage or the comprehensive and collision coverage purchased by about three quarters of Michigan drivers. As a result, the promised savings from the law has been illusory, says Heller, even as many drivers now have lower quality coverage and the system of care for seriously injured Michiganders is falling apart.
“With drivers paying insurance companies more and getting less protection, it has become clear that the so-called reform has failed to improve the insurance market for Michiganders,” said Heller. “The insurance companies and their shareholders may be celebrating, but for drivers who want insurance and quality care, reform has been a disaster.”
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CPAN is a broad bi-partisan, Michigan based coalition, whose mission is to be the consumer advocate for auto insurance policyholders, those who have been injured in a motor vehicle crash and the medical providers caring for them, representing them at the Capitol, in the courts, and in the public forum. For more information, please visit www.CPAN.us.
Douglas Heller is the Director of Insurance at Consumer Federation of America. He serves as member of the U.S. Department of Treasury’s Federal Advisory Committee on Insurance and as a member of the Executive Board of the Coalition Against Insurance Fraud.