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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’
Add me please
I’ve been with Allstate for 20yrs or longer., please add me to the
Add me please thanks
Add me they are ridiculously high here in Texas
My family has had Allstate for 2 decades now and we live in Texas.
Please add me. I was with all-state for 11 1/2 years .I finally switched to another insurance company this year, because Allstate was too high for a vehicle that was 1995. Although I bought a 2008 this year Allstate premiums we’re still too much.
Add me please thanks
I pay a very high premium with Farm Bureau. Can someone check into this
READ the article, it’s about ALLSTATE!
I have been with Allstate for over a year.. and i now this “drivewise” reward thing is crap.. i agreed to the reward check.. and my premium went up!
Florida is the same. The insurance does not fluctuate with the economy. Allstate and Geico inflate prices to inflate their pockets. Not sure why these companies keep getting away with scamming policy holders
Because you are in Florida. We ALL get screwed in Florida.