State Farm's embrace of tiered pricing in the wake of losing auto market share will help the company maintain underwriting discipline, according to a property-casualty analyst.

Jay Gelb, senior property-casualty analyst for Lehman Brothers, said the strategy has been successful so far for other personal lines insurers. "We believe Allstate, Safeco and Progressive are far ahead in tiered pricing and should continue to gain profit share."

Tiered pricing refers to the practice of replacing the traditional standard and non-standard classifications with ratings numbering in the hundreds. Scoring customers according to credit records remains a critical element in the new strategy.

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