Allstate’s Growth Plan Includes Shift in Agent Commissions, Hike in Advertising

By | February 10, 2020

  • February 11, 2020 at 9:33 am
    Augustine says:
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    Any Allstate captive agents on here that can comment on their commission changes? It sounds like typical corporate spin…

    • February 11, 2020 at 1:23 pm
      Jack says:
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      Yep, spin it is. Let me unspin it for you. We thought we could cut out the agents and make all the money ourselves and get a huge bonus at the top. But we found out the business that by passes a direct agent is not profitable so we lost money. So now we are going to pass off that poorly underwritten business to the agents and pay them less to handle it (fix our mess).

      • February 11, 2020 at 1:36 pm
        Augustine says:
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        Hi Jack, sadly I thought that to be the case. Are you captive, or on the independent agency side? I spent my formative years in the industry on the carrier side as a captive. I can tell you that a lot of the new business I saw get put on the books was through blatant misrepresentation of the risk. I am hardly surprised that these knuckleheads are getting eaten alive by their captive business. Typically, when you engender a mercenary culture and turn a blind eye to premium leakage due to shady practices, it doesn’t really end up working well.

        • February 11, 2020 at 1:47 pm
          Jack says:
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          Augustine- I’m an indep in SC. You hate to say it but there are agents with every carrier that just want to write business and are willing to do turn a blind eye even while talking directly to a client. There’s a reason loss ratios are so high on the policies bought online, you would think these CEO’s would learn from others mistakes. Always follow the money and look at who made the bonus for that “online idea”. I’m just thankful I don’t have to insure every person that calls the office. We say no thank you, why don’t you call the lizard or Flo everyday. :)

          • February 11, 2020 at 3:04 pm
            Andrew says:
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            Couldn’t agree more with your post, Jack. .

          • February 12, 2020 at 8:17 am
            CL PM says:
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            My understanding is the profitability problems at Esurance are related to their marketing expense, not their loss ratio. It’s been a few years since I viewed the data, so maybe it changed, but loss ratios were OK. But interesting that they had to spend more money to get the direct business than that written through agents. Hard to keep up with Progressive and GEICO’s advertising budgets.

          • February 12, 2020 at 1:42 pm
            Jack says:
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            In this economy (MAGA) their investment income should have knocked it out of the park, for advertising expense, on a poor loss ratio product to be increased to a point to cause the combined ratio to increase, makes no sense, except to the guy that pushed Esurance.

          • February 14, 2020 at 7:02 am
            CL PM says:
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            Jack – Not necessarily true. Most insurance companies only invest about 20% of their portfolio in equities. The rest is mostly in bonds due to needing to protect the capital. So, in today’s interest rate environment, insurance company returns are not as high as seen in the broader market. My company’s 2019 return on investments was about 4%.

    • February 11, 2020 at 2:06 pm
      SWFL Agent says:
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      No real surprises here. Having two (2) branded products , Esurance & Allstate, is a waste of resources. May work with some products (Lexus & Toyota, Marriott and Ritz) where there is a clear delineation of products and customer types but people expect insurance policies to be the same regardless of channel. Their basically shopping for rate without the channel preference that companies think they have. Progressive tried to split the brand in 2002-2003 and found it didn’t work.

  • February 11, 2020 at 2:04 pm
    Tiger88 says:
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    No mention of the mass appointing of independent agents and brokers (like Marsh) here in South Florida. It would not do anyone any good at all to be an Allstate agent in Florida as once your direct writer, product and advertising/marketing advantage disappears (because every good IA will soon be appointed) there isn’t any point in being an “Allstate” agent…cuz you’re no longer “special”.

    • February 12, 2020 at 2:21 pm
      RonT says:
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      Not to mention that the base commission for IAs is 60% higher than it is for the company’s captive agents

  • February 11, 2020 at 4:03 pm
    lonestar says:
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    Tiger88, it seems the term Captive and the carrier’s female dog are now synonymous. Being Exclusive is not at what it seems, and should be renamed to being in captivity. After all, that is what captive means, right?

  • February 11, 2020 at 9:56 pm
    knowall says:
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    A lot of these big companies and executives used to treat the agents like family; now they’re treated as chattel; as Judge Smails once proclaimed in Caddyshack, “You’ll get nothing and like it!”

  • February 11, 2020 at 10:10 pm
    Blauw Florijn says:
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    It doesn’t seem to be as detailed. There is something missing.

  • February 12, 2020 at 8:24 am
    Northeastagent says:
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    I want to grow up an be an Insurance company executive. It really must be the best job in the world. You can buy brands and destroy them. Then blame someone else. Hire a consultant
    waste some more money. Buy into another disaster for quick fix. Then ditch that one blame
    agents and the weather. Then move onto another company and repeat all while making giant Salary & Bonuses. It really is a great life. And while never holding an insurance license
    or selling or ever servicing the product that you are managing. I love America!

    • February 12, 2020 at 10:20 am
      Augustine says:
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      I worked at one fortune 100 insurer. It was the worst place I have ever worked in my life. I wasn’t sure where they found their management team or executive staff, but it was almost as though they went out of their way to hire the most sycophantic group of mouth breathers that they could find. Plus their uber politically correct corporate culture was just endless virtue signaling. They had a framed picture of Harvey Milk and Cesar Chavez in the lobby of their call center. The irony of having a picture of Cesar Chavez but simultaneously treating their call center employees like chattel was not lost on me… Unfortunately, it was evidently lost on them….

      • February 12, 2020 at 2:04 pm
        Jack says:
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        Augustine- That’s a good one. I remember getting my first taste of the PC corporate culture while at Allstate’s claim adj school. When they said “the person being offended is who determines what offensive is” I knew Allstate was in the PC shitzer. They and most, still are.

    • February 12, 2020 at 2:12 pm
      Jack says:
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      Executive Compensation
      As Chair, President, and Chief Executive Officer at ALLSTATE CORP, Thomas J. Wilson made $17,814,076 in total compensation.
      Organization: Allstate
      www1.salary.com › Thomas-J-Wilson-Salary-Bonus-Stock-Options-for-…

      • February 13, 2020 at 7:51 am
        CL PM says:
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        Max Scherzer of Washington Nationals makes $37M per year. Who is more over paid – Scherzer or Wilson?

    • February 13, 2020 at 2:48 pm
      Eddie Hall says:
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      To be a CEO you also have to pat yourself on your back a lot and tell everyone what a good job you are doing and interview with industry publications and tell them what a great job you are doing. Encompass had a CEO that was an expert at this. But, she last very long.

  • February 12, 2020 at 2:03 pm
    TommmyH says:
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    “some of the variable compensation used for agent renewals has been moved to new business”
    This is code for cut renewal commissions and slightly increase new business commissions. Agency owners used to be sold on the idea of work hard for 10 years building a book of business and then you can enjoy a nice living off the renewals. Those days are over at Allstate and many other agencies. They want you to grind for new business for your entire career and struggle financially if you ever stop.

    • February 13, 2020 at 9:48 am
      Fair Playing Field says:
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      And on top of that, Allstate is/was a big proponent of “Complementary Group Rating” (price optimization) which is designed to increase book retention but does so by steadily increasing rates for those it identifies as most likely to renew regardless of rate increase. I get the concept from a product management perspective, but as a consumer I’m not fond of it.

      I’m on the company side and always focus on new business penalty and renewal retention. IMO the best way for a company to manage those aspects is to treat its producers as its customers. Good producers take pains to manage their book. Leave them to it and reward them for performance.

      • February 13, 2020 at 1:59 pm
        Mr. Solvent says:
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        Price optimization doesn’t represent insurance pricing at all and almost every state has protections in statute that should automatically eliminate this practice. Problem is most consumers have no idea it’s going on so they can’t complain to have it banned.

        • February 18, 2020 at 9:32 am
          Fair Playing Field says:
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          What’s with the downvote on Mr. Solvent’s remark? In any event, I’ve just offset it.

  • February 12, 2020 at 2:18 pm
    RonT says:
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    I’m certain the “new” compensation plan is nearly as “wildly popular” as the company is with its agents as a whole. Recent internal Allstate Agency Relationship Satisfaction Survey results were nothing short of abysmal. In many categories agent satisfaction with the company has dipped 20 to 30 points I the last 12 months. That doesn’t bode well for a company that plays with agent compensation nearly every single calendar year.

  • February 13, 2020 at 2:06 pm
    Mr. Solvent says:
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    I like how they point to Progressive. 2/3 of Progressive’s business STILL comes from the IA channel.

    • February 13, 2020 at 5:00 pm
      agent14 says:
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      And, Progressive upped their commissions recently for the IA channel… I wonder how long it will take for Allstate agents to start leaving in droves?

  • February 18, 2020 at 11:36 am
    Agency says:
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    Their are several problems with their strategy. First of all, salaries and pay are increasing across the board and with such a low unemployment rate, you will lose talent this way (both from attrition and disinterest from new recruits). This will further result in fewer agents who will have more policies per agent. But this doesn’t help with growth. Also with a reduction in commission, this will effect the values of these Allstate agencies and the trust in buyer a book of commission rates are not stable. The captive agency model is broken and Nationwide is the first to see the writing on the wall. It may be years before the others do, but think they will all go to being independent carriers at some point and scrap the captive system.



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