Allstate charges 'sucker' customers higher car insurance premiums

Occurred: February 2020

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US insurer Allstate increased premiums for customers already paying the highest rates for their insurance, while keeping premiums more or less the same for 'thriftier' customers, according to media reports.

A joint investigation by The Mark Up and Consumer Reports found that Allstate devised a 'customer retention model' or 'advanced' price adjustment algorithm that identified existing big spenders and squeezed more money out of them than others. 

The algorithm also determined customers which customers were owed discounts. Though some customers were owed thousands of dollars, Allstate capped the discounts at a half percent irrespective of the amount owed. Senior customers were overrepresented within this cohort.

Insurers are not obliged to inform customers if they are denied discounts, and the National Association of Insurance Commissioners told The Markup that it had never heard of an insurer voluntarily informing its customers that they had been denied a discount. 

Maryland rejected Allstate’s proposal on the grounds that it was discriminatory. But it was approved by Arizona, Arkansas, Wisconsin, and a number of other US states. 

Operator: Allstate
Developer: Allstate
Country: USA
Sector: Banking/financial services
Purpose: Assess customer risk
Technology: Price adjustment algorithm
Issue: Bias/discrimination - age, income
Transparency: Governance; Black box; Marketing

Page info
Type: Incident
Published: March 2023
Last updated: February 2024