The Northbrook, Illinois-based insurer has completed its first full quarter of ownership.
Allstate has just completed its first quarter since it purchased Esurance, at a price tag worth $1 billion and topped insurance news, to help it to establish itself more firmly in the online marketplace, which is currently dominated by Progressive and Geico.
As of yet, many analysts remain skeptical about the potential offered by the acquisition.
Equally, Allstate knows that it must create a place for itself online, regardless, as it is a preferred place for purchasing policies among many consumers. This, according to a J.D. Power & Associates shopping survey which was conducted in April 2012. At the moment, almost 90 percent of the premiums at Allstate are written by agents.
Over the last three years, there has been a 50 percent increase in the number of consumers that use online channels exclusively for obtaining quotes. Data from J.D. Power & Associates shows that this brings the level to 23 percent of all consumers who have this preference.
Equally, there has been a drop in auto policy shopping across the country, driving it down to its lowest level in five years. Within the last year, only one quarter of all policyholders have looked into a new insurer. The J.D. Power & Associates data shows that this is a plummet of 8 percent since 2011.
At the same time, though, Esurance has been experiencing an increase in the number of policies that it has sold, as well as in the revenue it is receiving through premiums. Equally, it has experienced a higher number of losses. In the first quarter of 2012, it saw underwriting losses worth $61 million, following closely on the heels of $44 million in losses from the quarter preceding it.
One analyst has stated that Esurance could follow the path of Encompass, which had been acquired by Allstate in 1999.
The purpose of the Encompass acquisition was to provide service to those customers who had avoided Allstate agents because they did not want to limit themselves exclusively to the product line of a single insurer. The peak for Allstate independent agents had been $2.1 billion in 2004 and 2005, but it has now fallen to $1.6 billion as of last year. When that deal had first made insurance news, the insurer had forecasted that the premiums would increase to $3 billion.