Auto insurance market share war could drive down rates

A brewing market share war in the auto insurance industry could drive down the cost of insurance at a time when rates were supposed to be heading higher around the country.

Allstate has been a troubled enterprise for a while with much dissension in the ranks. They use what’s called a ‘captive agent system,’ meaning that an Allstate agent just writes the company’s own policies. Independent agents, on the others hand, can shop different policies among several companies to get you the best rate.

So Allstate has been caught in a bind. They have not had the best reputation for customer service when it comes to handling claims. And then they’ve been in a civil war with their agents who write the policies over issues about commissions and how they’re paid.

The Wall Street Journal reports the consequence is that Allstate is losing significant market share. Both Progressive and Geico are poaching customers. You also have insurers that really focus on the customer like USAA and Amica Mutual who are also doing well. And then there are other insurers that are sleepers and not exactly household names but they’re growing and grabbing more market share.

While there have been some clear intentions to raise auto insurance rates around the country, including moves by Allstate, I think the beleaguered insurer will have to turn its attention to winning back market share. And that should trigger a market share war.

If I’m right, that means you can put your business in play for auto insurance and maybe homeowners insurance too.

But mark these words well: A cheap rate does not a good auto insurer make. For many people, if there’s an opportunity to save, they’re going to grab it even if it means going with a company that stinks when it comes to handling claims. You’ll have to decide if the savings are worth it to you when it comes time that you need to make a claim.