"Allstate has come a long way in becoming more sophisticated in understanding the risks that it underwrites, and it's had very, very good financial results because of that," said Donald Light, an analyst at research and consulting firm Celent. "They've clearly made a management judgment that they'll take the lumps that they have to take, public relations-wise, in order to insulate themselves from the shock losses."

"It's OK to make a profit, but they are ripping people off," said J. Robert Hunter, the consumer group's insurance director. "Why are they so risk-averse? If they're not going to take on risk, what do we need insurance companies for?"