http://www.chicagobusiness.com/article/ ... /302029980
Does Allstate have enough 'good hands'?
By Steve Daniels February 04, 2013
The exodus of Allstate agents has been more profound than the company previously disclosed, leaving the Northbrook-based insurer with a sales force at historically low levels even while its biggest agent-sold competitors add to their rosters.
In 2011, Allstate Corp.'s number of exclusive agents fell by 22 percent, to 8,925 from 11,503 at the end of 2010, according to disclosures in a recently released company report on corporate responsibility. The insurer previously said in a Securities and Exchange Commission filing that it had about 10,000 agents at the end of 2011. But that figure apparently included more than 1,000 personal financial specialists, who help agents' customers with life insurance and investment needs.
Allstate, the nation's second-largest auto insurer, hasn't yet reported agent numbers for 2012, but agent sources say the count fell further still and is approaching 8,000.
Meanwhile, its main rivals that sell through their own exclusive agents are moving in the opposite direction. Bloomington-based State Farm Insurance Cos., the No. 1 U.S. auto insurer, had 17,958 agents in July, up 4 percent from 17,316 at the end of 2007. Los Angeles-based Farmers Insurance Group of Cos., the country's fifth-largest auto insurer, has more than 14,300 agents and has grown its ranks over the past three years, a spokesman says, despite generating $10 billion in 2011 auto premiums versus Allstate's $17.5 billion.
Allstate CEO Tom Wilson recently told investors that he expects soon to reverse a years-long slide in market share. But the proposition that customers are more loyal to the brand than to their agents will be tested this year. That's because many of the more than 2,500 agents who departed in 2011 have become independent agents selling on behalf of Allstate competitors, and their one-year agreements with Allstate not to solicit their old customers have expired.
An Allstate spokesman didn't respond to calls and emails requesting comment.
Speaking in December at a conference in New York sponsored by Goldman Sachs Group Inc., Mr. Wilson said, “Over the last three years, over 1,000 of our lower-performing agencies have left the system. That was intentional on our part. And their businesses have been merged with stronger agencies or acquired by new owners.”
To restart growth, Mr. Wilson is betting customers won't follow their agents who left or were pushed out.
Bryan Ahlquist departed Allstate in October 2011 after 25 years as an agent in the Tampa-St. Petersburg, Fla., area. His auto book of business at Allstate was about $1.3 million when he left.
Mr. Ahlquist says he adhered to his contract's one-year nonsolicitation requirement, but former customers found him anyway. He estimates that about a quarter of his former Allstate customers have come to him for cheaper insurance from other companies.
He left, he says, because Allstate treated him and other agents like employees rather than the independent contractors they technically are. “I was putting hundreds of thousands into a business they could take away from me with 90 days' notice,” he says.
Now that his nonsolicitation agreement has expired, he says, he's free to reach out to former customers. “I was wearing lead boots before November,” he says. “I've got Nike high- performance running shoes on now.”
Investors have bid up Allstate's shares 61 percent from brutally low levels since the end of 2011 on lower claims costs and better returns in the company's homeowners insurance line after a series of steep price hikes. They don't seem overly concerned about Allstate's shrinking auto insurance business as long as it continues to boast industry- leading profit margins, some analysts say.
Mr. Wilson attributes the decline in auto policies over the past several years primarily to big rate hikes in New York and Florida, two of Allstate's biggest markets that had turned unprofitable. He also blames the company's decision to exit or shrink its homeowners exposure in states prone to weather catastrophes.
“When you tell 1.2 million customers, 'We're sorry, we can't provide you (homeowners) insurance anymore,' if they have their auto insurance with you, they typically are not happy about it,” Mr. Wilson said in December.
Allstate says much of its repair work in homeowners insurance now is done, so those are yesterday's headwinds. Today's may be agents-turned-competitors.
What do you think?
Sam S. wrote:
Allstate needs to focus on price, first and foremeost. Consumers are savvy lot these days and price is what sells in these tough times.
2/6/2013 2:25 PM CST on Chicago Business
Richard H. wrote:
Allstate treats agents poorly. It is an incredibly tough job and HQ greatest concern is themselves.
2/5/2013 12:49 PM CST on Chicago Business
Sherrie L. wrote:
Jose P., you may be correct,but I can tell you from experience that if one has a truly competent insurance agent that is trusted, a prudent insurance buyer will follow the agent's recommendations, even if there is a slight price difference. Allstate bills itself as a caring company, but anecdotal evidence in recent areas (Hurricane Sandy's aftermath) has suggested otherwise. If the price difference is great, even a trusted agent may not be followed. I had a high-risk business (teaching children an activity with some risk of injury) and I had a reccommended agent whom I trusted, not just in insuring this business but in insuring my home and auto. (she did not suggest, and I do not know if she represented, Allstate) When I sold that business and went into a different, totally unrelated business, I sought her out to insure the new business. I still use her.
2/5/2013 10:43 AM CST on Chicago Business
Larry S. wrote:
If Allstate recognizes, it's advantage can be , must be, IT superiority!
2/4/2013 6:55 PM CST on Chicago Business
Jose P. wrote:
This will turn out to be good news for Allstate.
Insurance used to be something you had to "sell". Today, it's something you have to buy. The vast majority of consumers are now doing their own rate comparisons online - Allstate should be investing their money were consumers are going, and that's not to a workforce.
Mr Insurance agent, I would like to introduce you to Mr. Travel Agent, and Mr. Stock Broker. Of course, there will always be complex insurance (Life, etc...) that will still need to be "sold", but that is a fraction of the industry.
2/4/2013 9:13 AM CST on Chicago Business