Personal auto

Geico has raised the stakes in the arms race on customer rebates. Unlike other carriers to date, its plan is structured to more explicitly motivate retention, attract new business and protect float.

Geico customers will get a 15 percent credit on renewing auto policies.

Yesterday, Allstate and American Family announced a plan to partially refund personal auto premiums. We expect these to be the opening bids in a protracted battle with regulators.

The carrier will hand $600mn in premiums back to auto customers to reflect the decline in driving due to the Covid-19 crisis.

The carrier has agreed to reinsure legacy business underwritten by Zurich from 1 October 2015 to 30 September 2018.

Root has has been dependent on private equity and reinsurance – a source of capital in flux given the Covid-19 pandemic – to continue operating at its current growth rate.

The BLS released February CPI data which included a 0.3% personal auto premium inflation. While the figure is up from 0.0% the previous month, these levels of inflation have not been seen since 2007, and point to carriers competing strongly for growth.

The insurer will have access to the data of customers driving 2020 model vehicles.

J Adam Abram said the carrier would closely monitor its book of run-off ride-share business.

The biggest drag on underlying results was personal auto.

Progressive reported solid January results, but its stock still under performed the market by ~3% on the day as it became the latest to face the pressures of meeting elevated expectations in auto.

Coming into 2019, with margins reaching cyclical highs, and pricing still elevated, the dynamic in auto changed on a dime.