Watchdog: Allstate Auto Insurance Pricing Scheme Is Unfair

Watchdog: Allstate Auto Insurance Pricing Scheme Is Unfair

The "Good Hands" people at Allstate have figured out a shady, possibly illegal, way to push up insurance rates, according to the Consumer Federation of America, which said Tuesday it discovered a letter from the insurance giant that is a "smoking gun."

And the group, one of the most influential consumer advocacy groups in the nation, said the implications to American consumers over what Allstate (ALL) is doing is huge and can impact anyone with car insurance.

If regulators don''t block this scheme immediately, American consumers will pay a huge price.

"This is a watershed moment in the history of insurance consumer protection," J. Robert Hunter, CFA''s Director of Insurance and the former Texas Insurance Commissioner, said in a statement. "If regulators don''t block this scheme immediately, American consumers will pay a huge price. While we are forced by law to buy these companies'' insurance products in order to drive, there seems to be nothing stopping them from targeting millions of unsuspecting customers with unnecessary and unjustified price hikes.

The CFA said Allstate created a new way to calculate rates that creates sometimes sharply higher rates aimed at consumers who are "unlikely shop around to find a better price."

Among the ways the new surcharges and policy adjustments are unfair, the CFA said, includes a random price adjustment based on the month someone was born. As an example, a 46-year-old man with a good driving record who was born three months after another 46-year-old man with a good driving record could be charged 30 percent more on his premium, the CFA said

Link: http://www.dailyfinance.com/2014/12/16/allstate-auto-insurance-pricing-scheme-unfair/

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