Allstate has engineered a multi-faceted reemergence in the Bay State
While Allstate never really left the Massachusetts marketplace, Encompass Insurance has maintained a low-key presence here for many years, the insurance giant has changed gears and is now unveiling the full-court press it has prepared for Massachusetts personal lines. In addition to the recent announcement that Allstate was reestablishing a captive agency system in the Commonwealth , the company’s independent internet- only subsidiary, Esurance will also be entering the mix here in 2013.
As discussed at the last CAR Governing Committee meeting, Esurance has notified CAR about its plans to sell insurance in Massachusetts as well as notifying the authority that it is pursuing status as a separate member of CAR from the Allstate Group pursuant to the CAR Rules. As a separate and distinct CAR member, Esurance will have its CAR assignments calculated as though it were a stand-alone company and not part of Allstate.
In 2011, Allstate bought Esurance, a web-based insurance company that focuses on the sale of automobile insurance. Currently operating in 34 states, it issues policies through an affiliated agency and processes claims through the same agency. Based upon CAR’s records, Esurance’s business plan is to not have any physical presence whatsoever within the state. Every facet of the operation will function from outside of Massachusetts.
The marketing of the policies will be entirely web-based, policy issuance and underwriting along with the control of all of the operations will be in Texas; the phone centers will be in North Dakota and Iowa while claims will be handled out of Tampa, Long Island and New Jersey. Whether Esurance can or will offer insureds lower market rates than its competitors remains to be seen, but what is readily apparent is that that Massachusetts agents are going to have a triple threat through Encompass as a regular line carrier, Allstate with its captive agents (see article) and now an overarching commodity type product through Ensure.
In presenting a legal analysis of Esurance’s petition, CAR’s outside counsel, Morrison, Mahoney, issued a Legal Opinion concluding the following:
Applying standard principles of corporate law to the framework and criteria established by CAR to determine whether Esurance is entitled to separate treatment from other companies in the Allstate Group, including Allstate and Encompass, based upon separate management, we
conclude there does not appear to be any legal impediment to approving Esurance’s election for
separate treatment under Rule 22.
Upon this legal recommendation, the Governing Committee subsequently approved (with one recursal) Esurance Insurance Company’s request to be treated as a separate member from the Allstate Group.