source: www.chicagotribune.com
By Becky Yerak | Tribune reporter
January 30, 2009
To some extent, auto insurance is recession-resistant because drivers have to have coverage. But Allstate Corp. officials confirmed Thursday that the recession is causing its auto insurance policyholders to look for ways to reduce premiums.
"They are dropping collision [coverage], going to higher deductibles, going to lower limits," George Ruebenson, president of Allstate Protection, said during a conference call to discuss the company's fourth-quarter financial results.
A premium is the price an insurer charges for coverage. Collision coverage pays for the damage to a policyholder's car in an accident, while a deductible is the amount of the loss that's paid by the policyholder. A limit is the maximum amount of coverage paid for a particular loss.
"We're seeing a change from a lot of platinum sales at Your Choice Auto to more of value, where people take a lower-premium policy," Ruebenson said.
Allstate's Your Choice Auto program offers options for motorists depending on whether they care about cheap or comprehensive coverage. Platinum is the most comprehensive coverage.
The Northbrook-based company said that it is "disappointed" by efforts in 2008 to improve customer loyalty and disclosed that it has started to tie part of the company's 401(k) contributions to how effectively employees retain policyholders.
"Acquiring and retaining customers is vital to our success," Allstate Chief Executive Tom Wilson said during the conference call.
"I'm disappointed by the lack of significant improvement in 2008 on customer loyalty, and we're highly focused on improving that result in 2009."
Later in the call, Wilson explained that Allstate's 401(k) savings plan "is part incentive and part retirement" for Allstate workers.
Employees and agency owners "who don't treat our customers well and don't deliver customer loyalty will no longer be a part of the Allstate family," he said.
Allstate stock closed Thursday at $23.50, down 20.7 percent, a day its report that investment write-downs contributed to a $1.13 billion fourth-quarter loss.
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