The auto insurance price war is on, at least in the Land of Lincoln.
Progressive, the third-largest car insurer in the U.S. and also the third-largest in Illinois, has dropped its rates here 9 percent to 10.6 percent on average, depending on which Progressive subsidiary customers use, according to filings with the Illinois Department of Insurance. The new rates took effect June 26 for existing customers.
Bloomington-based State Farm, the largest auto insurer in both the U.S. and Illinois, is cutting its prices nearly 14 percent here, part of a nationwide price reduction averaging 11 percent.
And Chevy Chase, Md.-based Geico, the second-largest U.S. auto insurer and No. 4 in Illinois, has created a subsidiary in Illinois to serve new customers, it said in a filing. Presumably, that unit will offer lower rates than the various subsidiaries serving Geico’s existing customers, but the company didn’t respond to a request for comment.
Progressive’s move is out of character for the fast-growing insurer. It generally has kept its prices stable in recent years while competitors tended to make frequent changes.
Mayfield Village, Ohio-based Progressive has about 375,000 auto policies in Illinois. State Farm has more than 1 million.
The moves are evidence that much of the industry is shifting from month-to-month customer rebates to reflect the lower level of driving since the coronavirus pandemic shifted much of the white-collar workforce from the office to their homes. Now that economic activity has picked up, albeit not at the levels before the public health crisis, insurers are making bets on whether long-term driving habits will change.
“As restrictions are being lifted and states begin to open back up, we are closely monitoring our usage-based insurance data and are seeing personal auto vehicle miles driven and claims volumes steadily increase,” a Progressive spokesman said in an email. “These increases vary at the state level, however, and as such we’re not pursuing one-size-fits-all policy credits. Instead, we are beginning to provide policy credits and file rate adjustments in select states reflecting our expectation of loss costs, and we’ll continue to monitor our driving and claims data to determine where additional actions are warranted.”
So far, Illinois appears to be one of the states where Progressive’s rate cuts are deepest. It’s cutting rates on average by 5 percent in neighboring Indiana for most of its drivers and 10 percent for a sizable minority, according to filings. A random scan of several other large states, including Pennsylvania, Maryland and Texas, showed only marginal changes, if any.
Northbrook-based Allstate, the second-largest auto insurer in its home state, thus far hasn’t changed rates here. It offered 15 percent monthly discounts through June and recently disclosed in filings that new customers buying insurance online or over the phone rather than through an agent would get a 7 percent discount. That “shelter-in-place payback” apparently isn’t in effect in July, as Allstate has made no announcement to that effect.
Geico, by contrast, offers policyholders 15 percent rebates for all six months after they renew their policies.
An Allstate spokesman didn't respond to a request for comment.
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Progressive joins Illinois car insurance price war - Crain's Chicago Business
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