Congrats to Allstate. They lay off approximately 3,800 employees and get quick, short term gains for a quarter or two. The company continues to cut commissions for agents and reduce employee headcount, while bringing in new high paying executives. They are losing agents by reducing commissions on renewals and spinning it as we’re “shifting” commissions. The P&C numbers aren’t really growing beyond rate increases. What is growing are other products, small incidental business, e.g. cell phone protection, which is peanuts compared to their auto and home business. Progressive and Geico continue to eat their lunch with their bread and butter products (auto and home). State Farm is also taking massive rate reductions, while Allstate continues to lose long term exclusive agents so they can turn into a call center model and cut expenses. Investors are smarter than Allstate’s top brass and that’s why the stock is down 20% YTD, compared to the insurance index of P&C being down only 9% and the S&P being up over 8%. You can’t shrink yourself to success. If you want to grow top line revenue….and ultimately the stock price (which is the ultimate score card), than you need to expand and reward your sales force, not cut, cut cut.
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Congrats to Allstate. They lay off approximately 3,800 employees and get quick, short term gains for a quarter or two. The company continues to cut commissions for agents and reduce employee headcount, while bringing in new high paying executives. They are losing agents by reducing commissions on renewals and spinning it as we’re “shifting” commissions. The P&C numbers aren’t really growing beyond rate increases. What is growing are other products, small incidental business, e.g. cell phone protection, which is peanuts compared to their auto and home business. Progressive and Geico continue to eat their lunch with their bread and butter products (auto and home). State Farm is also taking massive rate reductions, while Allstate continues to lose long term exclusive agents so they can turn into a call center model and cut expenses. Investors are smarter than Allstate’s top brass and that’s why the stock is down 20% YTD, compared to the insurance index of P&C being down only 9% and the S&P being up over 8%. You can’t shrink yourself to success. If you want to grow top line revenue….and ultimately the stock price (which is the ultimate score card), than you need to expand and reward your sales force, not cut, cut cut.