Tom Wilson: Mario, do you want to take that?
Mario Rizzo: Yes. Certainly, social inflation is a phenomenon that we and the industry have been dealing with for an extended period of time. I think in our business, we certainly see it in the personal auto side, in casualty coverages. We’ve also seen it on commercial auto and in the shared economy, just given the higher limits that we tend to write on that business. It’s hard for me to predict whether it will get better or get worse going forward. I think it’s a reality of what we’re experiencing right now. And as I talked about some of the analytics and the processes we’re putting in place, to identify and manage injury claims more effectively. That’s a big reason why we’re doing it is in response to the social inflationary impacts we’ve seen.
I’d also go back to something I said earlier around quickly not only identifying but settling claims earlier in the process where we can to mitigate the potential exposure to social inflation going forward. And the reduction in pending claims across a variety of segments that we’ve already executed on and are going to continue to focus on going forward. So I think our approach has been to modify our processes and take appropriate actions to offset the impacts of social inflation. And again, I don’t want to predict whether it will get better or get worse, but we know it’s a reality and we’ve adapted in response to it.
Andrew Kligerman: Was there a big pickup in bad faith claims?
Mario Rizzo: I wouldn’t say there’s a big pickup in bad faith claims now.
Andrew Kligerman: Okay. And then the next question is around the rate increase. So I think Greg was touching on how your competitor got in the teens. I think it was 17.4% and you got 6.9%. My question there is should we worry that there will be anti-selection? If other players are getting these big rate increases, will that drive more consumers to Allstate as the pricing appears better in California?
Tom Wilson: Mario, do you want to take that?
Mario Rizzo: Yes. Look, as I mentioned earlier, even with the rate that we were approved for €“ we didn’t change the actions we took around down pay requirements. So our risk appetite is not €“ has not changed in California, and it won’t until we get to a point where we believe we’re adequately priced, and that will take at least a couple more rates. Will we get anti-selected against? I think if we keep the restrictions in place or down pay requirements in place, we mitigate that risk. And it’s all relative. The rate increase that was approved was on a much larger indication than the one we filed. So it’s hard to tell what the relative price position is. But again, we’re not going to change our stance. Our focus in California is to reduce growth as much as we can until we get to rate-adequate levels, and that’s the way we’re going to manage the business.
Andrew Kligerman: Thanks a lot.
Operator: Thank you. And our next question comes from the line of Josh Shanker from Bank of America. Question, please.
Josh Shanker: Yes, thank you. I was looking at the new policy application, and I was trying to tease out Allstate, National General and agency versus exclusive agency versus direct. And I noticed that there was a non-significant amount of independent agency, new policy applications coming from non-National General sources. And so I’m wondering, is Allstate brand being sold through independent agencies? And the reason why I asked this is also I noticed that new policy applications from Allstate exclusive agents are up, but Allstate branded new policy applications are down overall. Meaning that it feels like there’s a channel shift that you’re excited about getting business from Allstate exclusive agents, but not from the other sources where you sold Allstate branded products last year.
