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A recent Allstate class action lawsuit claims the insurance company puts some policyholders on a “suckers list,” forcing them to pay high premiums.
According to plaintiffs Sara Shannon, Rosa Palacios and Debra Corbello, consumers on the “suckers list” may be forced to pay up to 850 percent higher, or up to 90 percent lower premiums.
The plaintiffs claim that these “drastically different premiums” are charged for the same policies and the same coverages, despite policyholders having identical situations and risk perspectives.
“Allstate has knowingly betrayed the loyalties of millions of its long-time Texas auto policyholders through its implementation of two related discriminatory schemes, both of which involve Allstate charging higher premiums to its more tenured policyholders than it charges otherwise identically situated newer policyholders for the same or materially the same coverages,” the Allstate premiums class action lawsuit argues.
“As Allstate is well aware, its conduct lacks any actuarial basis (indeed, it defies basic actuarial principles).”
The “suckers list” scheme was reportedly revealed by Consumer Reports and The Markup in a February investigation.
The investigation looked at rates of thousands of insurance documents acquired by the Maryland Insurance Administration when Allstate tried to change its rates several years ago.
Although the rate changes aimed to increase consumer retention, analysis of the documents allegedly showed that big spenders would be faced with significant price increases.
Although Maryland rejected these changes, regulators in Arizona, Arkansas, Illinois, Iowa, Michigan, Missouri, Nebraska, Oklahoma, Tennessee, and Wisconsin reportedly allowed similar plans to move forward. Allstate allegedly refused to tell Consumer Reports whether or not these plans resembled the Maryland plan.
“These revelations are concerning enough on their own, but they’re also an unmistakable harbinger of the new age of consumer threats we’re racing headlong into,” said Marta L. Tellado, President & CEO of Consumer Reports, in a press release.
“Like security flaws in our gadgets and invisible toxins in our food, hidden biases in the algorithms that set more and more of the prices we pay pose an insidious threat.”
According to the Allstate premiums class action lawsuit, Texas consumers are affected by this “suckers list” scheme as well as an “open” or “closed” books scheme.
This scam reportedly separates insurance “books” into “open” or “closed” categories based on the age of a policy. Newer consumers are allegedly given lower premiums while long-term policyholders subsidize the newer customers with higher payments.
“The premiums that Allstate charges new policyholders in the Open Books are generally significantly lower (often, very significantly so) than the premiums Allstate charges existing policyholders in the Closed Books for the same or materially the same coverages,” the Allstate premiums class action lawsuit claims.
These rate differences are allegedly concealed by agents at the direction of Allstate.
In fact, Allstate agents in Texas are reportedly threatened with financial punishment and even agency termination if they deviate from the pricing schemes.
“To ensure that Allstate Texas agents stay in line, Allstate takes aggressive measures to threaten and intimidate the agents to ensure they do not deviate from the playbook,” the Allstate premiums class action lawsuit.
The plaintiffs note that retaliation from Allstate can be “financially devastating to Allstate Texas agents, not just because it affects their income going forward, but also because Allstate requires agents to invest heavily (the agents’ own money) in their agencies despite Allstate retaining the ability to unilaterally terminate the agency.”
Plaintiffs in the Allstate premiums class action lawsuit claim that, “in addition to being disturbingly cynical, unethical, and unfair, Allstate’s conduct,” the schemes violate Texas price optimization laws and insurance code. In fact, the Texas Office of Public Insurance Counsel allegedly confronted Allstate over its price intolerance scheme in 2015.
The plaintiffs seek to represent two Classes of Texas Allstate policyholders who were affected by the alleged open/closed scheme since Jan. 1, 2008 or the alleged price tolerance scheme since June 26, 2014, respectively.
The Allstate premiums class action lawsuit seeks damages, restitution, statutory penalties of up to $25,000 per potential Class Members, interest, attorneys’ fees, and court costs.
Do you pay extremely high Allstate premiums or premiums for another insurance policy? Share your experiences in the comment section below.
Plaintiffs and the proposed Class are represented by John R. Davis and Michael L. Slack of Slack Davis Sanger LLP; Joe K. Longley of Law Offices of Joe K. Longley; and Roger N. Heller and Johnathan D. Selbin of Lieff Cabraser Heimann & Bernstein LLP.
The Allstate Premiums Pricing Class Action Lawsuit is Sara Shannon, et al. v. The Allstate Corp., Case No. 1:20-cv-00448, in U.S. District Court for the Western District of Texas.
UPDATE: On June 26, 2020, Allstate Corporation 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.
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275 thoughts onAllstate Class Action Says Customers Added to ‘Suckers List’
i had allstate for 5 years and for 1 car i was paying 244. 00 in their gold package plan. with lower premiuns. when asked if could lower it they offered to raise my deductible to 1000 and by rate would be 224.00 but have been accident ticket free for over 6 years. i finally canceled and moved to state farm and now i pay 137.00 a month thats a big jump. but at the same time i get people calling me all the time to switch back to allstate. loved the perks but couldnt afford the price. so i left.
Vicky
Yes. I live in Utah. I just canceled my policy with Allstate. They were charging me $316.00 for 1 car. I traded the car in which was an expensive truck for a lower price Suv. And they wanted to raise the premium to $326.00 per month!! I was in a accident 2 years ago. The premium should be going down. I switched to State Farm and they found out the accident had been reported incorrectly and had it fixed! Allstate never realized that for over 2 years! They are charging me $289.00 for exact same policy. Pretty big difference per month from one insurance to another. And I had been with Allstate for over two years no accidents or tickets. Paid on time every month. I feel i was being scammed. Please look at my situation.
Been with Allstate for almost 50 years with vehicles and 48 years with homeowners policy. Always keeps going up, even with a few small auto claims over 40 years ago. Once when questioned why, agent replied, “Well, I need a raise, too.” Last year questioned why auto rates were increased, again and was told, “Ambulance rates have increased, so we have to increase rates.” Never mind that I have NEVER had use for an ambulance. In fact, I have NEVER had an accident, nor a traffic citation, in my entire life, since I was 16…52 years.
This is happening to me as well policy goes up every 6 months and they say same stuff rate increase im florida
I had to take my truck get the bumper fixed from accident went to company they said to go to(didn’t know i could take it to place of my choice) truck was returned worse still can’t get help with that situation
I got Allstate for car and home insurance,, when I started out my bills were $48. For car and $98 Home insurance six months later car is $86. And home is $184. When I asked why the higher rates their response was due to higher claim rates another words I’m paying for everyone else who used the insurance even tho I didn’t have any claims or any reason for it to go up yet it did in six months
I admit my insurance is high, but they have been really good during this epidemic. I am behind two months and they are telling me to pay what I can.
That’s because they have to by law. You better believe that’s not them letting you skip payments!!!
It’s something how these big businesses screw you over and get away with it until they get caught…and that’s even if they get caught…then you try and sue them and you get a judge that’s just as bad,it’s a never ending cycle…
I had a Claim a fire with Farmers. Next thing I know for the last 5 years everybody I went to get Insurance homeowners, always give me a high premiums,Because of the claim with farmer .which forced me the stay with farmers, And they would tell me that’s the reason my premium was high.
My parents we’re with Allstate for well over 40 years when I came back to hang out with my dad in 2008 went on the policy and after his passing continue to keep the policy home cars Whole Nine Yards please add me to the class action because they are not nice people
I just talked to my agent a few weeks ago and told him that I’m pay almost 3 times the amount of ppl premiums that houses are 3 times bigger than mine and he said we need to rewrite the policy before it renews this year. I made a change and it went up $40 more dollars. I been with over 20years and notice the policy never goes down and they stick you with them for 5 years if you file a claim and that’s not fair
My payment was 101 per month. Two months later I get charged 131. They said my age ( have not had a birthday with this policy) and I drive to many miles. Not one thing has changed but I pay more. Please add me to your list and thank you 4 helping stop this wrongdoing.
I live in Georgia, I’m paying $101 a month for basic state minimum coverage on a 10 year old vehicle. I recently moved from Nevada where I was paying $79 for the same coverage. When I first started coverage on the vehicle my payments were only $49.