Allstate Denies Agents’ Group Claim It Plans To Cut 3,300 

NU Online News Service, Feb. 4, 2:45 p.m. EST

Allstate is denying a charge by an agent group that it has a goal of eliminating more than 3,000 agents in three-to-five years.

Jim Fish, executive director for the National Association of Professional Allstate Agents (NAPAA), said an internal company memo laying out the company’s strategy to grow its business in the future calls for the elimination of up to 3,300 agents whose business has not grown to between $3 million and $4 million or more in premium volume.

The reasoning behind having agencies of this size is to improve customer access to the agency by increasing service availability and hours, he said. To achieve this, agencies will have to expand their support staff, something a smaller agency cannot do, he explained.

In order to reach this target, the company will need to consolidate agencies to achieve the benefits of scale, said Mr. Fish.

Allstate agents are supposed to be independent contractors, he said. Yet, the company is trying to exert an increasing amount of micro-management over the agencies, down to service hours and office design, and a number of agents are getting “fed-up” with the carriers interference.

A company spokeswoman said Allstate has not set any target for agency number or size.

“Our goal is to provide a consistently superior customer experience,” the company said in a statement. “We intend to grow and succeed with Allstate agencies.”

Allstate said in the statement that growing agencies is good for customers, the agencies and Allstate.

“We’ve seen that agency locations in the range of $3 million to $4 million in premiums (between 3,000 and 4,000 policies in force) have the scale to support the staff and other resources needed to provide superior levels of customer service.”

The spokeswoman said the company is providing the tools to allow smaller agencies to grow to these levels the company believes will achieve this goal.

“Some agencies may choose not to take this journey with us, but for agency owners committed to providing consistently superior levels of service, the opportunities have never been better to grow their agencies,” Allstate said.

Mr. Fish said alarm bells went off for agents after the company’s chief executive gave a speech Dec.8.

In that talk at the Goldman Sachs Financial Services Conference, Tom Wilson, chairman, president and chief executive officer for the Northbrook, Ill.-based insurer, outlined the company’s objectives.

During the speech he emphasized that the company is seeking to expand business by emphasizing customer service and addressed its exclusive agent channel.

Among the points of the strategy he outlined, he said, “Our goal is to have fewer, larger agencies that provide a more consistent experience for our customers. This will strengthen our agency force and ensure they remain a significant part of how we serve customers.”

At one time Allstate exclusive agents were employees of the company, but that changed in 2000 when they were made independent contractors, losing pensions and benefits and creating a toxic atmosphere among some.

Agents sued the company, accusing it of age discrimination because many of the affected agents were 50 or older. Mr. Fish alluded to that practice, saying it seems like the company is trying to weed out older producers who have high retention rates and low loss ratios and are not selling a lot of new business.

Aiming to confront the possibility that the company will cut its number of agencies, NAPAA is planning to hold a job fair during its national conference in May in Washington, D.C., said Mr. Fish, “to get agents some solutions.”

• • 2/5/2010 6:51:06 AM
  • Keir J Anderson
  • Young agents take notice.
  • This article set of alarm bells for me as a young agent. Why should any young person invest his or her hard earned money and time to create a cash flow of millions of dollars for a corporation that will always want more. Working for companies that have an attitude like this is akin to pushing a rock up a never ending hill. If they are treating agents this way now they will do it again later.
• • 2/5/2010 9:37:16 AM
  • Rosemarie Bostelman
  • Allstate
  • One should visit Allstate's new "call center" in Illinois to see the "customer service" being conducted by hundreds of inexperienced individuals. If they can pass a state exam they are now an "agent". They sit in open areas,answering the phones where hundreds of these people are subjected to seeing and hearing the activities of all the others (something out of an Orwelle scenario). Very indicative of Allstate officials truly lacking in the understanding of an experienced, hard working agent's value to them. A real shame and definitely far from caring about the consumer. Their statements about big is better are pure smoke screens for their real agenda.
• • 2/5/2010 10:36:25 AM
  • Ed Herrera
  • DeJaVue all over again
  • Agents of the Farmers Insurance Group of Insurance Companie took the same issue that Allstate Agents are facing now to the National Labor Relations Board or NLRB in the early 70's and won concessions from Farmers but most importantly the Farmers Agents became a little more independent.
• • 2/5/2010 11:13:19 AM
  • Stanley P. Farquardt
  • Corporate Liars!
  • It's one thing to have a corporate business plan to move towards larger agency entities in order to capture economies of scale, cut management expense by cutting those needing to be managed and going with Allstate agency owners who are showing they can thrive and exist within company goals and systems. Allstate senior managers have been consistant on voicing these goals over the past two years. It's quite another issue to deny that this plan exists when confronted and pretend that the corporation has no such goal, even after telling its agency force the stated goals for the past two years. Allstate as a corporation is entitled to do whatever it wants, be it fair or unfair to an agency owner force that is made up of a wide spectrum of sizes and attributes. But to lie through their corporate teeth when such plans are finally made public speaks of a weak and contridictory senior management team that behind the scenes works one plan, while publically talking about another. Allstate managers: Do what you need to do...but be up front about what you intend to do.
• • 2/5/2010 11:31:11 AM
  • Robert C Smith
  • Allstate's denial of any target agency levels
  • Of course Allstate's upper management,did not and will not announce a specific number of agencies that it wants to be gobbled up by the larger agencies. The fact is that agencies under $2M have great difficulty meeting the company's annual required prodcution levels. Tom WIlson knows that the jungle will handle his goals.Sad situation.
• • 2/9/2010 1:16:20 PM
  • Chris
  • Look through a different lens
  • Why would a company hold onto a group of agents that aren't producing what they need to be? In other words, if Allstate has 3,000 agents who are just coasting, and collecting a paycheck - why should they continue to incur costs to manage these guys and gals? Why wouldn't they cut the fat and increase efficiences? Hey Mr. Allstate Agent - enough of the free ride you've had for the last 10 years - step up production or move on to something else. The business environment has changed.
• • 2/10/2010 3:30:24 PM
  • Jim Fish
  • Allstate Denies Agents’ Group Claim It Plans To Cut 3,300
  • In NAPAA’s opinion, the statements made by Allstate since this story broke in the Chicago Tribune are not “denials” at all, but rather attempts to camouflage the truth. NAPAA continues to believe that the company intends to eliminate thousands of agent positions through involuntary terminations and, perhaps, through some sort of forced attrition program wherein agents will be faced with new requirements and/or quotas that many simply cannot achieve or afford – causing many of them to leave in despair. It appears that these are the very agents that company spokesperson Mary Ellen Theilen was referring to when she said “Some agencies may choose not to take this journey with us…” In addition, NAPAA has received reports from some parts of the country that management has warned agents about the impending reductions in their regions. For example, we have received more than one report from California that as many as 400 agents will be eliminated – and this is only one state out of fifty. The company is not fooling the agency force. Most agents saw the handwriting on the wall when the company announced its new model in Canada in 2007. There the company snatched the renewal books of business away from the agents and shuttered approximately 256 locations, forcing agents into approximately 103 company offices. Interestingly, agents here were assured by management that the Canadian model would never be imported to the U.S., but from our vantage point, it’s looking more and more like the Canadian model here every day… Jim Fish Executive Director National Association of Professional Allstate Agents, Inc.

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