Allstate Corp. has started considering the driving records and automobile insurance claims histories of people in Oklahoma and Kansas who apply for a new homeowners product that it plans to roll out to other states through 2014.
Allstate's "House & Home" product considers auto loss history "as part of our underwriting because leading industry data points to a strong correlation between a good auto loss history and a lower likelihood of homeowners losses," said Laura Strykowski, a spokeswoman for the Northbrook, Ill.-based Allstate Insurance Co., in email and telephone interviews.
Allstate will take the information garnered from the limited offering to "enhance the product before making it available to consumers more broadly," Strykowski said. Allstate Insurance Group is the second-largest U.S. property/casualty writer based on 2010 net premiums written of $24.8 billion, according to BestLink.
The product is an "innovative new product that provides a more comprehensive approach to underwriting in the best interest of customers," she said. It offers "significant flexibility and choice so customers have the ability to tailor coverage for their specific needs, plan for their potential risks and fully consider different cost options."
State Farm "is currently using characteristics of the auto policy, and in some states, using auto claim histories, in rating for homeowner's insurance," Missy Dundov, a spokeswoman for State Farm Insurance, said in an email. "We have identified relationships between certain auto characteristics that are predictive of future homeowner loss potential." In the state of Illinois, State Farm does not use driving or auto claims records to determine homeowners pricing or eligibility.
State Farm Group, based in Bloomington, Ill., is the largest U.S. property/casualty writer based on 2010 net premiums written of $50.8 billion, according to BestLink.
State Farm started using these additional characteristics in August 2010, Dundov said. "Due to confidential clauses within our ratings models, we cannot share...what states do use the driving record," she said, but added it's "a very small amount and that most states we do not."
Meanwhile, Jim Fish, executive director of the National Association of Professional Allstate Agents, said Allstate's move could be a "tough sell" unless its competition does the same thing.
The other hurdle is asking potential prospects about their driving records, and how many mortgages they carry, all of which affect the price of that policy, Fish said. If other companies don't follow suit "it's going to be some pretty easy pickings for them." In Oklahoma, at least, Allstate requires homeowners have their auto insurance with Allstate too, he said. "That also presents some issues."
What isn't yet known is whether Allstate will check driving records at policy renewal time on the homeowners and whether Allstate will surcharge policies at renewal for the driving record, Fish said, noting this could be another "consumer surprise."
Strykowski said the offering allows Allstate "to fill the gap and make coverage available to more customers with more options that can help balance both coverage and cost."
Liberty Mutual Insurance Co., the third-largest U.S. property/casualty writer based on 2010 net premiums written, and Farmers Insurance, the ninth-largest, weren't able to comment.