Thread regarding Allstate Corp. layoffs

Consumer reports expose on pricing model

Rather than apply the new rates all at once, Allstate asked the Maryland Insurance Administration for permission to run each policy through an advanced algorithm containing dozens of variables that would adjust it in the general direction of the new risk model. Allstate said the goal of this new customer “retention model,” which it was rolling out across the country, was to limit policy cancellations from sticker shock.
After questions from regulators, the insurer submitted thousands of pages of documentation on the price changes —including data showing how they would affect each individual customer, a rare public window into details of its auto insurance pricing that have otherwise been kept behind a wall of privacy, labeled a trade secret.
When The Markup and Consumer Reports conducted a statistical analysis of the Maryland documents, we found that, despite the purported complexity of Allstate’s price-adjustment algorithm, it was actually simple: It resulted in a s—ers list of Maryland customers who were big spenders and would squeeze more money out of them than others.
Customers who were already paying the highest premiums, of about $1,900 or more every six months, and were due an increase would have borne price hikes of up to 20 percent. But drivers with cheaper policies, who deserved price jumps that were just as big, would be charged a maximum increase of only 5 percent. Customers in the 20 percent group were more likely to be middle-aged.
Middle-aged drivers were overwhelmingly given larger increases
We also found Allstate’s algorithm would have denied meaningful decreases to thousands of Allstate customers who the company’s new risk profile showed were paying too much. That 36-year-old from Prince George’s County would not have saved $3,772 on his policy as he deserved, documents show, but rather gotten a measly discount of $26. Discounts were capped at a half percent across the board.
Maryland ultimately rejected the plan, calling it discriminatory, and it never went into effect there. However, the insurer has continued to propose plans with a customer “retention model” in other states. Some have been approved and are actively being used.
Allstate declined to answer any of our detailed questions and did not raise any specific issues with our statistical analysis, which we provided to the company in November, including the code used to calculate our findings.

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Post ID: @OP+15QxJCCf

3 replies (most recent on top)

Apparently the folks who make the decisions on the pricing model do not need to sign off that they will conduct their jobs with integrity???

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Post ID: @1tce+15QxJCCf

This is from February.

https://www.consumerreports.org/media-room/press-releases/2020/02/investigation-finds-allstates-secret-algorithm-resulted-in-s—e/

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Post ID: @1cyv+15QxJCCf

I guess this is the “shared vision” and integrity in action....

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Post ID: @swb+15QxJCCf

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