16-Allstate’s Innovative Pricing

The automobile insurance market has seen price declines since 2006. During this declining-price period, Allstate has done well, gaining market share by offering innovative pricing.

The company instituted a program called “Your Choice Auto”. It launched this program in 2005, just before industry prices started to fall. This Your Choice program offers drivers a specific benefit in return for a slight premium in the cost of their insurance policies. One option in Your Choice offers a 5% rebate on premiums paid by drivers who remain accident-free during the term of the insurance. A second option in Your Choice is “accident forgiveness.” This option guarantees that the insured’s rates will not go up, even if the customer has an accident. These creative uses of the components of a price have increased Allstate’s market share and profits at the same time.

The two examples in this story change the components of the price by changing the performance benefits and the price simultaneously. There are four other components of a price that also improve revenues and profits. You may find them, in their many variations, in the Improve/Pricing/Brainstorming Ideas on StrategyStreet.com

Posted 4/28/08

Allstate’s pricing innovations reduced prices for some low-risk customers in the market. They were a direct threat to all the competitors in the market. Accordingly, others copied the new pricing approaches.

These pricing policies were so successful for Allstate that other leading companies copied the innovations. By 2022, several large companies offered both safe driver rebates and accident forgiveness options. Successful pricing initiatives rarely remain unique for long.  They are simply too easy to copy once proven successful.

It is difficult to use even innovative, lower, prices to gain share. To see more about why go HERE.

Updated 1/19/22

Short audio takes: HERE and HERE


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If you face a competitive marketplace, read these blogs. We wrote them to help you make better decisions on segments, products, prices and costs based on the experience of companies in over 85 competitive industries. Much of the world suffered a severe recession from 2008 to 2011. During that time, we wrote more than 270 blogs using publicly available information and our Strategystreet system to project what would happen in various companies and industries who were living in those hostile environments. In 2022, we updated each of these blogs to describe what later took place. You can use these updated blogs to see how the Strategystreet system works and how it can lead you to better decisions.