Could Allstate’s ‘5 Minute’ Small Business Policy Transform Commercial Lines Sales?

By | October 19, 2016

  • October 19, 2016 at 3:49 pm
    Frank A. Lombard CPCU ARM says:
    Well-loved. Like or Dislike:
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    Smart people with a lot of money doing a lot of dumb things which offer little or no benefit to the insurance consumer. Now that is a “business plan! Commercial insurance buyers are not only BOP policies, they need auto coverage and workers comp coverage, professional liability, life, health, employee benefit programs, etc. Commercial insurance buyers own primary and secondary residences and cars and boats and planes, etc. They need agents and brokers with the tools to help them structure and administer programs to address all these exposures. Where is the effort to do something productive and constructive?

    • October 19, 2016 at 5:19 pm
      Deplorables says:
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      Frank, who am I to argue with a CPCU ARM? You are right. This site continues to promote start ups and online shopping for insurance. Agents are minimized for their services. What small business entrepreneur knows how to insure themselves for all the exposures they need? Quick answer, not many. I have had these guys try to add a personal car onto their business policy. I always ask them how it is registered. Seems to be a problem in most cases, especially if a wife is the primary driver or a kid.

  • October 20, 2016 at 9:06 am
    Why Not? says:
    Hot debate. What do you think?
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    I have been a commercial ins agent and managed commercial insurance for 35+ years. I was educated and trained with one of the leading niche commercial insurance companies in the US & Canada. For an agent to suggest that a leading company like Allstate is not providing a benefit to the business owner, just because they provide an alternative solution in the market place is foolish and dated. Look at the world around you, consumers are demanding these type of solutions, because they can’t get a local agent to provide them with answers when they want them, or the agent hasn’t taken the time to read the policy and understand the coverages themselves. I’d suggest that you investigate the product that is being offered and compare to your own skills. You may find that you are superior, and I applaud that, that is your competitive advantage and you should be selling that all day long. But my experience managing independent distribution for the past 30 years is that many agents are not providing consistent service and a direct solution may be a superior benefit than what they are receiving, and as someone who has personally researched and initiated commercial direct operations, you may find that technology can enhance the experience.

    • October 20, 2016 at 9:36 am
      Deplorable says:
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      Why not, thank you for insulting Independent Agents all across America for not working with their insured’s on their protection needs and forcing them to go on their own on the internet to guess at what they need. Allstate, a captive which has a bad reputation have always been weak on the Commercial side. They also treat their agents poorly and that is why a Guild was formed by the agents to deal with management with their commission cuts among other things. Providing this internet program smells a lot like them going around their agents once again. Good luck Allstate agents. Get out of your captive contract and join the Independent ranks.

      • October 20, 2016 at 4:27 pm
        okt0ber says:
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        Allstate captive agents are authorized to sell commercial insurance through multiple insurance carriers, both admitted and surplus, including Hartford, Travelers, CNA, MSA, Progressive, GMAC, Berkshire Hathaway, USLI, and plenty others. Allstate agents really aren’t very captive at all on the commercial insurance side of things…

        • October 20, 2016 at 4:36 pm
          Deplorables says:
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          Never heard of that before and haven’t seen it at all in my area. Independent agents sometimes do have an appointment with Allstate in small rural towns with little competition, but generally in larger cities, you will not find a single Allstate agent selling anything but Allstate. Why would a captive Allstate agent ever call an Independent asking to place business with agency companies if they represented a number of them? All of my markets say they would never plant with an Allstate agent even though they have been asked on numerous occasions.

          • October 21, 2016 at 11:05 am
            Jeanne LaRosa says:
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            Deplorables, Allstate Corporate allows their Exclusive agents to use approved vendors like ourselves, Butwin Insurance Group to help you place Commercial Business with other carriers through their Expanded Market Program. We have been in the program for over 20 years and work with at least 2500 agents across the country.

          • October 21, 2016 at 11:27 am
            Deplorables says:
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            So Jeanne, is Allstate going around your brokerage with this online program? After all, they will not have to pay any commission if a customer buys direct from them.

          • October 21, 2016 at 11:44 am
            Jeanne LaRosa says:
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            Deplorables, No, it is our understanding that it will have the same underwriting guidelines as previous so we currently only write what is outside their market anyway. When a policy is issued it will automatically be assigned to an Allstate Agent in their area. Now, how much commission they are paying to that agent, I wouldn’t know that.

    • October 20, 2016 at 10:03 am
      Mr. Solvent says:
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      Why not tell it to Travelers who tried and failed miserably to do business insurance direct?

      • October 21, 2016 at 12:28 pm
        Deplorables says:
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        Jeanne, Interesting. We have heard things like that from companies like Travelers who started an online quoting system. They promised that they would refer any client written to an agent in the area to round out the account. Must not have worked out well, because they never referred one account to us to round out. Promises, promises.

    • October 20, 2016 at 12:38 pm
      CA Agent says:
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      Why Not – One challenge for IAs is that they have not been given small business tools by their companies to compete in the emerging technology world. I represent a company (Stillwater)that is making an attempt to give us a small business product that competes. I can quote and sell a policy with them in five minutes just like Allstate claims. They need to dial in their rates in a few classes, but so far we like what they are giving IAs.

      • October 20, 2016 at 12:57 pm
        Deplorables says:
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        Small business BOP’s have been around for a while, but are limited to certain classes. They are fast and easy to quote for those risks eligible for them.

        • October 20, 2016 at 2:59 pm
          Mr. Solvent says:
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          Exactly right. BOP’s have been quotable in 5 minutes since the dawn of agency rating software. Stillwater doesn’t sound like they’re doing anything special. I have 2 excellent carriers that I can quote on-site. I still wouldn’t leave it to the business owner to know their needs without some prodding questions.

          • October 20, 2016 at 5:06 pm
            CA Agent says:
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            With most small BOP carriers that I have used, you still need to wait for an underwriter to tell you how much credit they are willing to give, so you can’t get a final, bindable quote in five minutes. With Stillwater, they’ve fully automated that credit process so I don’t have to wait for an underwriter to review the app. I get a quote and can issue the policy in five minutes. And an underwriter doesn’t look at the risk and change the rate after I’ve sold it.

          • October 25, 2016 at 8:38 am
            Mr. Solvent says:
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            It’s too bad that your markets are so weak CA Agent. I don’t pretend to know the CA market, but FL and MI are quite automated and in at least 90% of cases I can bind without a referral.

    • October 24, 2016 at 1:03 pm
      Because says:
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      Foolish and dated. Well, Why Not, let’s investigate the up to date methods of Allstate.

      They have an enormous advertising budget. Do they use it to educate the consumer or promote any form of understanding of the insurance product? No. They, like many other “giants” use the ads to promote comedy and once in a lifetime loss that they have seen. Let me combine two of them to illustrate: You need to be prepared for your dogs flooding your living room to rehearse their synchronized swimming routine. We’ve seen a thing or two, so don’t get caught with your pants down dealing with mayhem, like me.

      If you have indeed been an agent for 35 years, and have earned a decent living for 35 years as an agent, then you understand the difference between a “ROBO” insurance agent and an agent. And you understand that the 15% that they save a client in 15 minutes only serves the robo carrier (the 15% savings primarily being the commission they didn’t have to pay the evil agent). When the carrier sends the denial letter for the clients coverage because they didn’t select UIM (what IS that anyway, and why was my agent ripping me off by selling it to me?) and the recording tells you for the tenth time to “Marce Dos”, they finally get it. Now, Allstate will be denying the client benefits for business interruption because, well, hey, it never happened before, right? And besides, I bought an UMBRELLA! That covers EVERYTHING, right? That means I have FULL COVERAGE, right? Well, Marce dos.

      • November 1, 2016 at 9:59 am
        Deplorables says:
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        Because, you can throw Farmers in on the comedy commercials that are goofy to the extreme.

  • October 20, 2016 at 1:19 pm
    vox sanitus says:
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    This just looks awfully dangerous to afford $1 million in coverage in five minutes. Allstate apparently believes that advanced analytics can trump human judgment. I understand that the new generation of buyers are different but some of them, like some in any generation, are “people to stay away from”. It looks to me like a home for adverse selection which would attract bad risks.

    • October 20, 2016 at 3:01 pm
      Mr. Solvent says:
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      In their defense a simple BOP or GL isn’t exactly rocket science. I think what most agents take issue with is an insured’s lack of understanding of their own needs.

    • October 21, 2016 at 9:22 am
      Deplorables says:
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      vox, as I said before, the types of risks that are afforded coverage in 5 minutes are plain vanilla with not much exposure. I am sure CA Agent is not writing Dynamite Haulers or Crane & Rigging contractors with this nor is Allstate. The thing we object to is the notion that a risk knows their exposures well enough to obtain online quotes and buying coverage. Licensed agents have a lot of continuing education to comply with and keep their licenses.

  • October 20, 2016 at 1:26 pm
    Frank A. Lombard CPCU ARM says:
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    Now tell me, does it make any sense for a small business owner to consider one company for a BOP (like Stillwater or Allstate), another for Workers Comp, someone else for autos, professional and some other company for the businessowner’s personal coverage? Different billing systems, different auditors, different claims personnel? Or does it make more sense to try to find a company/agent capable of addressing many of these exposures? It would be my position on-line insurers are (currently) unable to address this task and I would conclude should not even be considered in the process notwithstanding all their simplified quoting and issuance programs. They simply don’t fit the needs of the consumer. IA’s are the only players capable of doing this for their clients and only if they make an effort to do so. I don’t see many actually doing it!

  • October 20, 2016 at 7:24 pm
    Jack Terrill says:
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    A consumer logs on and quotes his own business insurance in ten minutes. Ah ha! I need to see that system.
    Every one we use in our agency takes at lest thirty minutes (if you’re lucky) and then kicks about twenty percent out late in the process.

    I think it sounds like a great idea, but like most things, the devil is in the details.

    • October 21, 2016 at 9:28 am
      Deplorables says:
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      One of our marketing reps was singing the praises of their online package submission system. He said that if the agent didn’t see any red flags after checking all the boxes, it was ok to bind. Obviously he didn’t check with underwriting. Submission we had didn’t have any red flags, but we did get a message that it was in underwriting review. We had to jump through some extra hoops to get it approved. They are always trying to build a better mouse trap and sometimes it just doesn’t pan out or it is more difficult than they said it would be.

  • October 24, 2016 at 1:06 pm
    Because says:
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    Hey, pick a plan on line. If you like your plan, you can keep your plan, if you like your agent, you can keep your agent.

    Wrong. These carriers are going to bite it just like Google Auto did.

    • October 24, 2016 at 4:03 pm
      Deplorables says:
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      Actuary/Modeler to Board: We don’t know what went wrong. We thought this would work and all we are seeing is claims that aren’t covered and we have to keep telling the small businessman that it isn’t covered and they are mad about it. We saved him some money by going online, not paying commissions to a captive agent so he should be happy.

  • October 25, 2016 at 10:51 am
    Why Not? says:
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    Thank all of you for the healthy debate and feedback. I’m not attempting to insult anyone, I’m simply pointing out the facts: Within private passenger auto 80+% of insurance shoppers start on line today, 50+% of those will complete an application and receive a quote, 30+% will bind without a local agent involved. Those number didn’t happen over night and they continue to demonstrate that consumers are becoming comfortable making decisions about insurance on their own, particularly as online application systems become more intuitive robust drawing on data bases that exist today. Carriers provide explanatory information in the application and “live chat” resources as needed. Commercial BOP products offer broad coverage and are composite rated, so I encourage you to at least understand what may happen in the future, rather than just suggesting that everyone else is wrong and you are right. Humor in advertising is all about brand awareness, and creating consideration in the consumers mind. Once they recall the carrier brand, and get them to their site, carriers are educating the buying public, and just as we have seen in personal lines, I predict that more small business owners will be willing to explore that option in the future.

  • October 25, 2016 at 12:04 pm
    Frank A. Lombard CPCU ARM says:
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    OK, so let’s do the math. 80% of AUTO INSURANCE shoppers start on line and 50% (that’s 40%) of them complete an application and 30% (that equals 12%) who actually buy on line. With all the expense, competition and poor outcomes, that is not what I would call an overwhelming success story or a “wave of the future”. Following years of effort and a significant investment, 12% of the AUTO market is not that impressive. I suspect half of those people are so unhappy with the independent agency system, they would try any alternative.

    Carrier success with homeowners and BOP’s will be less impressive and it would be my position more troublesome for insurance consumers. Carriers do what is good for carriers, until that characteristic changes I feel the on line purchase of insurance will continue to be a less than favorable option.

    What business and personal insurance consumers really need is an on line real time way to display, maintain, administer and pay for their entire insurance program, like programs offered to people who buy stocks and bonds. Independent agents would benefit from offering this free service and preserve their position in the marketplace.

  • October 26, 2016 at 3:46 pm
    Cali Agent says:
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    What isn’t addressed in this article is the fact that Allstate had to do SOMETHING to shore up it’s sagging commercial production. As is typically the case with large carriers, their assumption is that the agents are the problem, when in fact the issue with greatly reduced production falls squarely at the feet of the insurance giant itself. This is because several years ago, they rolled out a new commercial insurance platform that one could most kindly refer to as an absolute and abject failure. The system is not at all intuitive. In fact it’s slow, poorly, organized, and crashes constantly. As a couple of examples of how poorly it’s written, the system couldn’t generate a payment receipt for the first six months it was in use. To this day, it also will not generate a BOP, or any sort of commercial application for the insured to sign. The system is quite useful to underwriters, but for the vast majority agents and their staff, who typically only dabble in commercial insurance, it’s just too difficult to navigate.

    • October 27, 2016 at 10:43 am
      CL PM says:
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      Cali Agent – It is so interesting to hear how agents view the carriers they represent. I have worked for several large carriers in product management. I, and the people I worked with, never thought that agents were the problem if results were not good. I’ve always focused on the pricing, underwriting, and service functions to find the problem. Even if growth was slow, I considered it more of a pricing problem than an agent problem. Agents I know want to increase their income. If we give them an easy to use, competitive product, they’ll sell the crap out of it. You might need to sell for different carriers.

  • October 27, 2016 at 9:53 am
    Deplorables says:
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    Cali, of all the carriers I see in the Commercial market in our area, I worry about Allstate the least. Perhaps the one area they might pick up some business would be to a new business who has not had insurance of any kind so they go online. I am sure the customer would be in “Good Hands” until an accident happened and a subsequent claim was filed.

    • October 31, 2016 at 3:32 pm
      Talmo says:
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      Sorry but I think your comments are not accurate. I know this first hand these are all opinions and completely wrong.

      • November 1, 2016 at 9:52 am
        Deplorables says:
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        Talmo, link? Have you been in business 5 minutes?

  • October 31, 2016 at 10:58 am
    blu lightning says:
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    A couple of points
    1. Carriers will try and lower expenses anyway they can-for the most part technology has allowed carriers to become far less people dependent to keep their business healthy and successful as technology has become cheaper than what employees cost over the last 15 years or so. Thats why you see fewer folks to handle things when you call, not to mention all the behind the scenes jobs that have been cut.
    With that in mind, carriers are now turning their attention to the commission side of commercial as the next place to gain a competitive advantage over their competitors.
    2. At some point in time carriers will get it right on automating Commercial. All you have to do is look at the market share and astounding profits that Progressive, Geico and 21st Century have in their direct channels to see that Commercial carriers could also achieve greater market share and profit by cutting out the commission.

    Good agents will always be around-even in personal, but the good agents need to bind their clients very closely to them so that they aren’t tempted to start splitting off part of their business to save some money.
    Its either that or the agents need to come together and start their own carrier to compete with the market changes.

  • November 1, 2016 at 7:48 am
    Wart says:
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    Given independent agents’ inability or unwillingness to “touch” small account business, a well structured program of this nature seems like a viable solution that will better enable the consumer to make informed decisions regarding their insurance needs and subsequent purchases — particularly with regard to the younger segment of our population. Perhaps, carrier benefits will be reduced expenses, better collection of underwriting information and data.



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