Allstate Corp., the largest publicly traded U.S. home and auto insurer, said the country’s transportation network is highly inefficient, with vehicles sitting idle for most of the day, and that the company is betting on inevitable changes to the system.
“Even moderate increases in effectiveness and efficiency have the potential to raise household income by 5 percent annually,” Allstate Chief Executive Officer Tom Wilson said Tuesday at a conference held by Barclays Plc. “I know of no other economic opportunity to generate this much wealth for Americans. Now, Allstate is leaning in to this opportunity.”
Some patterns have already shifted, with many young adults shunning car ownership and preferring to arrange trips through ride-sharing services such as Uber Technologies Inc. That company has announced plans to allow consumers in downtown Pittsburgh to summon self-driving cars from their phones.
The trends will eventually lead to safer roads and decrease the need for traditional car insurance, Wilson said. He still expects premium revenue to climb for at least another 10 years, partly because it will take many people that long to adapt newer technologies.
Empty Cars
Telematics, which allows insurers to track customers and charge lower rates to the safest drivers, has become more important to Allstate. The company has set up a unit, called Arity, that can collect data on drivers and sell analytic products to third parties, Wilson said in August.
Operators of toll roads might count on such data to calculate how much drivers owe for a trip, he said Tuesday. He previously said that doughnut shops and other eateries might pay for information on which customers are passing their locations, and at what time in the day.
No matter what, Allstate must be prepared for drastic changes in driving patterns, he said. The U.S. vehicle fleet of cars and light trucks is valued at about $4 trillion, and annual direct costs in the personal transportation system are more than $2 trillion, according to a presentation from the company.
“If you owned the personal-transportation industry and you were spending all that money, you’d shut it down today,” he said. “You’d redo it and have everybody go to work a different way. You wouldn’t need to drive, you wouldn’t have empty cars everywhere, you wouldn’t have parking lots everywhere.”
Allstate slipped 61 cents to $67.87 at 1:08 p.m. in New York as broader markets slumped. Still, the Northbrook, Illinois-based company has advanced more than 9 percent this year, beating the 3 percent gain of the 21-company S&P 500 Insurance Index.