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%.

        • September 10, 2020 at 6:25 pm
          Retired Allstate says:
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          Allstate management has always wanted what looks good and not what is good. When you hound agents and threaten them they write crap business.

    • 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 27, 2020 at 2:06 pm
      scott richards says:
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      I have killed myself for 16 years and for what. In the stroke of a pen and with no warning they have completely turned on any agent with tenure. They started this conversation by saying they had to make changes because we lost 1% market share to Geico and Progressive over a 10 yr period. Wow, did I tell you the Allstate stock went up almost 800% during that time frame and now our agency value (what crock of sh.. that statement is) is now worth less than it was a year ago. If you are trying to sell no one is buying it seems.
      oh and now they are buying back 3 billion in stock in a buy back program. Wonder were that money came from .. oh off the agents back. I want to leave this message for anyone on the Company side to read. Did you ever stop to think that maybe you only lost 1% because of the Agent channel and without the loyal customers to the agent (yes family and friends in small communities) you are going to hear a bigger sucking sounds than you have anticipated. These salt of the earth customers who have stuck with the brand will leave in droves when they see their agents leaving.
      Yes by the article we are all very exuberate about screwing you are giving the captives.

  • 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.

  • February 18, 2020 at 2:38 pm
    rodney says:
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    It’s very sad that Allstate mistreat’s the agency force so terrible. They come up with idea’s like drive-wise and try to force the agency to sell something that is really not benefial to the customer. News flash Allstate saving 4% is not enough discount savings when you go up 12 to 19% every 6 months not really seeing the value in that. Allstate wants to take customer service out of the agency completely and just have agent’s focusing on writing new business while they service policies on the back end to try to retain customers (lol) so much for Good hands . You want to know what will really work Allstate trimming the fat the expense ratio. You do that by cutting management that is really not needed get rid of the cars and the silly drive wise program. OPT out of all sport events then maybe you can give great discounts to customers instead of going up on every renewal.

  • February 24, 2020 at 12:46 pm
    Joey says:
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    I am stunned that Allstate has any captive agents left.

  • February 24, 2020 at 3:38 pm
    lonestar says:
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    Well, the same could be said for Farmers Insurance, yet with all the veteran agent losses, there seems to always be someone willing to change careers, and believe that they will “own” their own business and makes tons of money… I think a famous quote from P.T. Barnum would apply to this curiosity.

  • February 25, 2020 at 4:39 pm
    jestr says:
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    Here we go again with the demise of the agent and his value. Totally disrespected and to blame for bad choices by the Insurance Companies. We are steadily downgraded in our commission percentage and have to seek partnership with network brokers to find markets and then only get half the commissions we used to back 15 to 20 years ago.

  • February 25, 2020 at 8:25 pm
    Mike Honcho says:
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    The market is changing and most new customers don’t care or even want a local agent. Like Gretzky said, “Skate where the puck is going to be, not where it’s been”

    • February 4, 2021 at 5:25 pm
      Andy says:
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      Mike Honcho… not sure what market you’re watching but mine loves having a local agent. 4000 households, 20+ years and a 92%+ retention. Why do you think that geico and progressive have numerous commercials implying you’ll have a local expert there to help you with any problem. In reality, you have NOBODY in your corner and poorly trained service reps that don’t give a damn about you or anyone else.

  • February 26, 2020 at 9:03 am
    agent14 says:
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    Mike Honcho, tough love for sure… Recent studies show that 67% of consumers still prefer to seek out an agent when purchasing insurance. This number has been very steady for the last few years. It is the captive agency arrangement that is hardest on an agent. So captive agents, what you allow to happen will continue to happen, when it comes to poor treatment by your sole supplier of product, your captive carrier. You can vote with your feet and your money, and look for more / better suppliers if you really want to see a change in your carrier arrangements.

  • April 9, 2020 at 5:40 pm
    David Newell says:
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    Glad I retired 10 years ago.
    The “good times” just keep on a-rollin’. Different decade, same crap.

    There once was a semblance of “ultimate good faith” to the policyholders, and the policyholders that paid the premium were the customers. In my 40 years “tenure”, the shift to the “Agent/Broker as Customer” began, and an insurer marketing dept. might pay an agent/broker 30%+ for a medium or large PC book, and care little about the historical loss ratio.

    Now the impetus is towards squeezing out, entirely, the “middleman” agency (independent OR captive…) and keeping the margins “in-house” for executive pay and stockholder’s equity. Oh yes, and changing policy forms to reduce coverage. .

    “Ultimate Good Faith???” I was probably just ridiculously naïve..

    But on the good side? ??Global warming makes this totally insignificant. ???
    All better now…



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