Allstate Seeks Dismissal Of ‘Suckers List’ Class Action

Allstate Corporation has asked a Texas federal court to dismiss a class action lawsuit alleging that the company engaged in an unfair pricing scheme in which long-term policyholders pay higher rates than newcomers for the same coverage, and keeping a list of customers the company could wring higher premiums out of.

In legal news, Allstate says it should not be held liable because they do not actually insure the customers — they are just a holding company.

In saying that the customers’ claims should be thrown out, Allstate stated not only that they should not be involved in an issue over pricing, but that consumers have specifically targeted the holding company because they were aware that Texas law would have barred from from filing claims against the direct insurers.

The company did propose an alternative to dismissing the consumers’ claims, should the court reject that request. The company proposed that the Allstate policy premium class action lawsuit be put on pause and sent to the Texas Department of Insurance and the Texas insurance commissioner to be reviewed.

According to Allstate, the consumers intentionally filed their Allstate policy price class action lawsuit against Allstate specifically to dodge Texas law that would have prevented them from suing at all.

The company said that the insurers with whom the consumers really take issue are protected by the state’s filed rate doctrine, which bars a consumer from taking an insurer to court over rates that the consumer believes are too high, are unlawful, or are unfair in some way.

Allstate explained that insures are required to file their rates with the Texas Department of Insurance, and must base premiums charged to customers on the rates reported to and permitted by the TDI. Allstate Corp. asserts that the Texas federal court has no jurisdiction in the case because the court does not have the ability to change rates set with the TDI. Based on this, Allstate argues that the claims should be thrown out.

Additionally, Allstate asserted that the customers had not shown that the Allstate insurance companies had changed the rates set and permitted by the TDI.

Allstate went on to further attack the consumers’ claims, saying that the consumers took the holding company to court because they were aware of the laws prohibiting them from launching a legal challenge against their insurer and the rates they set.

For their part in this legal news, the policyholders filed their Allstate class action lawsuit in April 2020, saying that the company charges customers different rates for the same policy.

In their eyes, this practice violates the law and is unethical towards customers.

Specifically, customers asserted that Allstate would charge its long-standing customers more than newcomers.

Effectively, this meant that Allstate was able to reel in newer customers, using their existing customers to subsidize the cost of insuring new customers at low rates.

Consumer Reports conducted an investigation into another alleged practice also at issue in the Allstate policy rate class action lawsuit, in which Allstate supposedly puts some customers on a “suckers list.”

According to the investigation by Consumer Reports, Allstate would conduct an internal estimate about what the policyholders on the list might be willing to pay, and hikes up their rates as high as possible. According to the Allstate premium class action lawsuit, being on this list could raise a policyholder’s rates by 850% or decrease it by 90%.

Policyholders claimed that these rates are discriminatory, but Allstate attempted to shut down this by saying that Texas discrimination law regulates difference in pricing in one policy, not multiple policies offered by many insurers, at issue in this Allstate pricing class action lawsuit.

Additionally, Allstate addressed another facet of why they believe the claims should be dismissed, arguing that the consumers were not financially damaged by the alleged pricing schemes because they received the product that they paid for — insurance coverage at an agreed-upon rate. 

Have your insurance rates ever gone up? How did you respond to the change? Share your experience in the comments below.

The policyholders are represented by John R. Davis and Michael L. Slack Davis Sanger LLP and by Joe K. Longley.

The Allstate Insurance Premium Pricing Scheme Class Action Lawsuit is Sara Shannon, et al. v. The Allstate Corporation, Case No. 1:20-cv-0048-LY, in the U.S. District Court for the Western District of Texas, Austin Division.

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