RJ and Makay

Allstate Corp. has agreed to pay $1 billion to buy online insurance companies Esurance and Answer Financial to capture more business from customers who shop online for insurance.  Allstate is buying the companies from White Mountains Insurance Group, Ltd., a Bermuda-based financial services holding company.

Esurance, through its website and 24/7 call center, is the nation’s third-largest provider of auto insurance.  Since 2006, the company has more than doubled the number of its policies and grown premiums by an average of 20% a year.  It sells insurance in thirty states and also offers other personal lines coverage.  The company has a total of 839,000 policies in force, and added approximately 65,000 polices in 2010, an increase of 8%.

With early estimates of the earthquake-related damage in Japan already at $35 billion and likely to go far higher, it could end up being the costliest disaster in history — bad enough even to affect insurance rates in the U.S., industry experts say. Reinsurers in particular are apt to charge more for coverage in the next few months because of the 8.9-magnitude earthquake and tsunami that hit Japan and other Pacific regions a week ago, attorney Marc M. Tract predicts.

The event caused damage as far away as the West Coast of the U.S., though obviously the worst occurred by far in northern Japan, where whole cities and towns were flooded and several nuclear reactors were damaged and began releasing radiation. “I think it will affect U.S. rates ultimately. At some point, someone has to pay," says Tract, a partner and specialist in insurance and corporate law at Katten Muchin Rosenman in New York.

Inflation is occurring in some industries, but not property-casualty. The composite rate for P&C insurance dropped 5% in February — the fourth straight month of 5% declines in the P&C market, reports MarketScout.

The market seems “stuck,” says MarketScout CEO Richard Kerr. “The rates by industry, coverage, or account size change a bit each month but generally all categories are staying in the same range of premium reductions.”