Allstate Class Action Says Customers Added to ‘Suckers List’

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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