Allstate Corp. reported that its profit more than doubled in the fourth quarter thanks to lower catastrophe losses and improved homeowners business. The big insurance company posted a fourth quarter net profit of $724 million compared to a fourth quarter profit of $296 million a year earlier. However, for the full year 2011, the company said net income was $788 million, which is 15 percent below 2010, reflecting the high catastrophe losses of previous quarters.

Operating income increased to $750 million in the fourth quarter, a $479 million increase from prior year due to substantially lower catastrophe losses. Allstate said catastrophe losses totaled $66 million in the last quarter — way below cat losses of $537 million in the same period last year. Allstate has been pushing for rate hikes on its automobile and homeowners policies while also cutting back on writing business in difficult markets including Florida and New York. The higher premiums in homeowners helped offset a decline in policies.

Allstate completed the acquisition of online distributors Esurance and Answer Financial in October. The company said this acquisition increased insurance premiums earned in the quarter, but the insurer continued to experience reductions policy counts due to its pricing and underwriting restrictions in auto insurance in New York and Florida and homeowners insurance in catastrophe-prone markets.

The combined ratio for the 2011 fourth quarter was 90.5, or 1.5 points better than in the prior year’s fourth quarter. The combined ratio for 2011 of 89.3 was within the outlook established at the beginning of the year of 88 to 91. Thomas J. Wilson, chairman, president and chief executive officer of The Allstate Corp., said the company expects its combined ratio for 2012 to be between 88 to 91 as it he expects improvements in auto insurance in New York and Florida and homeowners returns to bee offset by investments in growth, particularly in the Esurance brand.

Total operating income for all of 2011 was $689 million compared to $1.5 billion, in 2010. With the decline attributable to the substantial rise in catastrophe losses experienced in 2011 compared to 2010. Property/casualty net premium written for 2011 was $26 billion, slightly higher than in 2010 and includes the results for Esurance following the close of that acquisition in early October. For the fourth quarter 2011, net written premium was $6.4 billion, an increase of 2.9 percent over the same period a year ago driven primarily by the inclusion of Esurance results for the fourth quarter of 2011. 

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A consumer group on Monday Jan 31, 2012 issued a study that alleges “disparate treatment” of low-to moderate-income families by auto insurers nationwide. The group is asking state insurance commissioners to consider lowering minimum liability coverage requirements and creating low-income purchase programs.

The study from the Consumer Federation of America (CFA) concludes that the auto insurance marketplace “denies important economic opportunities, especially those related to employment, to low- and moderate-income (LMI) households.”

The study’s intent, and message, was immediately attacked by several national insurance associations claiming the CFA report is misguided, infers “malicious intent,” makes incorrect assumptions about underwriting and even gets some of the facts wrong.

The CFA study asks state insurance regulators to ensure that auto insurance is fairly priced and affordable for LMI families so that they have greater access to car ownership and jobs

“We think these solutions are fair and practical and can be delivered by state insurance commissioners,” said J. Robert Hunter, one of the report’s authors, a former Texas insurance commissioner. CFA’s Executive Director Stephen Brobeck co-authored the report.

According to the group, it worked with Santa Monica, Calif.-based Consumer Watchdog on the study. Consumer Watchdog is working to get signatures to qualify its Insurance Rate Public Justification and Accountability Act for California’s Nov. 6, 2012 ballot. The initiative would “ensure fair and transparent rates for health, home and auto insurance,” prohibiting “unfair pricing” for auto based on prior coverage and credit history, according to its backers.

The CFA study cites several examples that its authors say prove “disparate treatment” of LMI households. It also shows that the bottom rung of families considered to be low-income pay 8 percent of more of their annual income on auto insurance.

One example, taken from a study by Consumer Watchdog, was a 30-year-old man in St. Louis with a Ford Taurus and a perfect driving record who commutes 20 miles per day. He carries comprehensive and collision insurance and a $500 deductible. If he were an executive with an MBA degree living in an upscale suburb, his average annual insurance rate would be around $558, according to the study. Get a free auto insurance quote

There is no doubt that a homeowners insurance policy offers you and your family the financial reimbursement you will need to get your life back on track after an insurable incident. But the financial benefits of having homeowners insurance are not experienced by policyholders unless they endure an insurable incident with a financial impact that exceeds their deductible. Of course, that doesn’t mean that there are no intangible benefits to enjoy as you pay your premiums each month.

Peace of Mind is Priceless

When you know that you have an insurance policy protecting your family, then you have peace of mind. That might not prevent an incident, but it can certainly help you sleep at night. Without homeowners insurance you are left with a subconscious nagging prompted by the insecurity that being uninsured brings with it. In this state, a lot of mental and emotional energy is used up wondering how you would rebuild your family’s life if your home were to become ruined in an insurable incident.

Guarantee Your Continued Financial Security

Insurance also ensures your financial stability. You probably have big plans for your retirement, your children’s educational future and the repayment of all your debt. But without homeowners insurance to ensure that your personal savings do not need to be utilized after an insurable incident, there is no guarantee that you will be able to realize any of these plans and dreams in the manner you want. Instead, you may be forced to use the money you so carefully saved just to rebuild your home after a fire or other tragedy. Saving money without knowing that you will be able to use it the way you intend can leave you feeling insecure and may even impact your motivation to save.

Insurance is a serious topic. It’s not a fun purchase and it isn’t something that you will use in your everyday life. A homeowners insurance policy gives you permission not to dwell on how expensive and devastating an insurable incident can be and the confidence to know that you will be able to recover financially after one.

ABC Insurance Services is here to make sure your home is properly insured for you and your loved ones. Call your Houston insurance agent today at (713) 782-2886 ABC to determine that you have the right amount of Houston home insurance coverage.