Feb. 7, 2012, 3:16 p.m. PST
McClatchy/Tribune - MCT Information Services
CHICAGO _ If you're a lousy driver, are you also more likely to be a mishap-prone homeowner?
Allstate Corp. believes there's a correlation.
The Northbrook, Ill.-based company confirmed that it has begun considering the driving records and auto-claims history of people who apply for a new homeowners' product in Oklahoma called House & Home.
House & Home, introduced in the Sooner State last October, effectively could make homeowners pay more of the cost of their roof repairs. Allstate said last week it plans to roll it out to additional states through 2014. Speaking to investors last week, Allstate Chief Executive Tom Wilson said House & Home could help the company reach its target of a 13 percent return on equity by 2014. Allstate's ROE, calculated by dividing net earnings by shareholders equity, was 4 percent at year end.
An Allstate spokesman confirmed Tuesday that House & Home marks the first time the nation's second-biggest home and auto insurer has used a potential policyholder's driving records and auto-claims history when giving quotes on home coverage.
"There's a strong correlation between auto-loss history and the likelihood of covered homeowners' losses," he said. "Allstate's new homeowners' product recognizes this correlation and rewards customers with good auto-loss histories with lower homeowner rates."
Most of Allstate's homeowner customers also have their autos insured with the company, so they might see a better overall rate for the household, the spokesman said.
Allstate's biggest rival, Bloomington, Ill.-based State Farm, doesn't use driving records or auto claims records to determine homeowners' pricing or eligibility, State Farm spokeswoman Missy Dundov said.
When Allstate introduced House & Home last October, it anticipated that homeowners might ask their agents why they're so interested in their driving histories.
So Allstate prepared talking points for the agents: "Research shows there is a strong relationship between auto and homeowners' losses and that a person's driving history can be a predictor of an individual's loss potential with their home," according to Allstate documents obtained last week by the Chicago Tribune. "The better your driving record, the better the price may be compared to someone with a poor driving record and multiple auto claims."
Unless other carriers follow Allstate's lead, the House & Home product could be a tough sell, said Jim Fish, executive director of the National Association of Professional Allstate Agents Inc.
For one thing, generally speaking, House & Home provides replacement cost coverage if the roof is less than 10 years old. Otherwise, it might pay only the actual cash value of the roof, documents show.
"If an Allstate agent is up against a carrier that pays full replacement cost on roofs, offers a reasonable deductible and doesn't make the customer jump through hoops, he probably won't make that sale," Fish said.
As for House & Home's linking driving records to homeowners' quotes, Fish said he understands Allstate's logic that careless drivers are more likely to be careless homeowners.
"But we also see consumers scratching their heads over the need to disclose information that is seemingly unrelated to the purchase of property insurance," he said.
Many businesses, including insurers, use all types of information, such as credit scores, to influence everything from whether someone should be hired to how much they should pay for insurance.
Social media also present opportunities for insurers. Trawling for information on Facebook, Twitter and other sites can enable underwriters and claims professionals to track individuals' lifestyles, experiences and habits, letting them see, for example, if a policyholder claiming a serious injury has just posted a photo of himself or herself engaged in physical activity.
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