Allstate To Purchase Esurance And Answer Financial

Allstate is what you might call your father's insurance company. It's been around forever and sells and services policies through a network of local agents. Consumers who want a personal relationship with their insurance agent choose a company like Allstate.

Esurrance, on the other hand, is a new breed of insurance conmpany, made possible by the Internet. Its customers tend to be younger and don't really want to know their insurance agent, they just want a low premium.

Match made on Wall Street

Can the two companies find happiness together? We'll soon find out, as AllState has announced it is acquiring Esurance and Answer Financial for $1 billion.

"Consumers today expect to have their specific needs met by their insurance companies,” said Thomas J. Wilson, Allstate's president, chairman and chief executive officer. “Our strategy is to focus on individual preferences and utilize different value propositions for distinct consumer segments."

Wilson said the plan is for Allstate to keep doing what it does and to let Esurance handle it's particular market segment. The acquisition, he says, is a way for Allstate to expand its business base.

“Esurance will expand our ability to serve customers that are more self-directed but still prefer a branded product,” Wilson said. “Answer Financial will strengthen our offering to individuals who want to be offered a choice between insurance carriers and are brand-neutral. Allstate will be the only company serving all of these consumer segments with unique insurance offerings.”

Esurance has become the third-largest provider of online auto insurance quotes. Over the past five years, Allstate says Esurance has more than doubled policies in force and grown premiums on average 20 percent per year.

Choice

Answer Financial serves self-directed consumers who seek a choice among insurance companies. Customers are given quote comparisons and assistance in choosing from 20 brand-name insurance companies.

The transaction has been approved by both companies' boards of directors and is expected to close in fall 2011. The transaction is subject to regulatory and other customary closing conditions, including review by antitrust authorities and state regulators.

Complaints

Complaints about all types of insurance companies have increased in recent years, as insurance companies have worked to reduce losses from claims. The days when an insurance adjusted showed up at the scene of a disaster and started handing out checks appear to be long gone, if they ever existed at all.

Today, a consumer might have to argue long and hard to receive damages they feel they are entitled to. Annie, of Athens, Ala., suffered damage to her brand new home when tornadoes hit the region late last month.

“I told James, the claims adjuster, two different contractors stated the entire room needs to be done but he refused,” Annie told ConsumerAffairs.com. “We had winds of 180 miles per hour, therefore just fixing the spots where the shingles were removed wouldn't fix the entire problem.”

And even though Annie had just purchased her new home in March, and presumably had taken out her insurance policy for the upcoming year, she said she has received a cancellation letter in the mail effective May 27.