Allstate is pursuing a three-year goal of becoming the “most diverse digital protection solutions company.” The strategic focus on all things digital includes staffing and cost-cutting measures, automated claims processing, and new premium pricing models. This article highlights leading initiatives of interest to insurance defense law firms that serve as Allstate panel counsel.
Technical Innovations with Automated Claims Processing
The COVID lockdown period drove many changes in both the number of claims handled by Allstate and the way they were resolved. Automated claim processing technology for vehicle damage is being used to settle claims more quickly. Photo and video software services, including QuickFoto Claim, Virtual Assist, and aerial imagery, all contribute to expedited payments to policyholders involved in an accident.
Here’s an interesting statistic from Allstate: claim payment digital transactions jumped from 19% in 2019 to more than 61% one year later in 2020!
On the down side, auto claim severity increased as a percentage of all accidents based on more serious accidents and higher parts replacement costs.
Allstate is moving to replace legacy technologies company-wide with a digital platform, including mobile applications for customers that can reduce the need for intermediary staff positions. The insurer is also transitioning to a remote workforce, and reports that during the 2020 COVID period 95% of the workforce operated remotely.
Telematics is another area where Allstate is at the forefront. Using smartphone or vehicle-based wireless telecommunications devices to transmit real-time driving data back to a central date repository, Allstate has amassed a database with 10 years of driving data covering 410 billion miles. Currently the company has over 25 million active connections, based in part on auto policyholders who participate in Milewise®, which allows drivers to pay for insurance calculated by the number of miles they drive. According to an October 9 Wall Street Journal article titled, “Car Insurer Lobbies to Pin Pricing on Tracking Driver Skills,” Allstate is working to persuade insurance regulators nationwide to allow telematics in premium pricing decisions.
In 2016, Allstate used its telematics expertise to launch a separate analytics company called Arity. This Allstate affiliate—based in Chicago with offices in Belfast and Bangalore—uses its data repository, advanced technology, and deep insights into driver habits to help power applications for other insurers and InsurTech companies.
Diversity, Equity & Inclusion
One of Allstate’s core values is “Inclusive Diversity & Equity,” according to the company’s 2020 Annual Report. This is reflected in staffing metrics that include a workforce with 55% of positions held by women and 39% of employees who are racially or ethnically diverse.
The company is committed to further diversity as reflected in its adoption of the “CEO Action for Diversity & Inclusion Pledge.” They also have a goal to train, hire and promote one million Black Americans by 2030. Hiring goals are reviewed for gender and ethnic diversity every three years.
Allstate’s commitment to staffing diversity is also being applied to suppliers across a full range of services. The company reports that it spent more than $311 million with diverse businesses in 2019.
As one example of its diversity commitment, Allstate selected a consortium of minority-, women- and veteran-owned business enterprises to handle a 2020 bond issue with a face value of $1.2 billion. Another example is the annual Supplier Diversity Exchange that brings together diverse business suppliers with Allstate executives.
As you might expect from a company in pursuit of a digital transformation, data security is a Board-level priority at Allstate. At every level of Allstate operations—from customer-facing sales tools to underwriting and claims models—an internal technology team is constantly vigilant in seeking out possible data breach attempts. An external cybersecurity team is also used to conduct penetration tests, review security protocols, and defend against a major cyberattack. Cross-functional teams that include claims, legal, information technology, and risk management work together to maximize data security.
Implications for Allstate Panel Counsel Members
An emphasis on diversity is one of the key takeaways from Allstate’s strategic goals. Law firms that are current panel counsel members, as well as those that hope to join the Allstate panel, should also prioritize efforts to achieve a more diverse legal team. Having an active Diversity Committee, a Diversity Statement, and a written hiring plan to increase diversity are all basic steps that can reflect favorably on a defense law firm.
Climbing the ladder of technical innovation is another area where law firms can sharpen their edge. Most law firms understand the need for tight levels of cybersecurity. Fewer insurance defense law firms, however, apply technology to speed claim processing or even calculate basic processing metrics like average time or cost to close a case.
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This article is provided for educational purposes only. It is not to be interpreted as legal advice or an opinion in regard to any topic discussed. The article should not be used as a substitute for legal advice from a licensed attorney in your state. Every situation is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.