http://www.chicagobusiness.com/article/ ... -insuranceAllstate misses the turn as rivals reinvent auto insurance
By: Steve Daniels June 27, 2011 *Or, Allstate CEO Tom Wilson Flexes His 'Art Of Performance Management' Muscles... By sending employees threatening letters? Reducing their pay?
Is that how a multi-million dollar CEO motivates their staff?
A true leader will not whip their subordinates into submission and create an environment of hostility and resentment -
A true leader will inspire followers to want to do more and to do it better.
His dream of a broader financial services empire in ruins, Thomas Wilson is running out of time to revive Allstate's once-dominant insurance business.
Since Mr. Wilson became CEO of the country's second-largest auto and home insurer nearly five years ago, Allstate has stuck to its old ways while rivals using new direct-sales techniques grabbed most of the growth in the $164-billion U.S. auto insurance market. Customers are defecting, premium revenue is falling and Northbrook-based Allstate's stock price is down by half since Mr. Wilson took the helm.
Shareholders seem fed up. Nearly 1 in 3 voted against his re-election as board chairman at last month's annual meeting, the highest percentage of "no" votes for any CEO of a Standard & Poor's 500 company this year.
"I think (he has) probably a year, maybe two at the most," says Meyer Shields, an analyst at Stifel Nicolaus & Co. in Baltimore.
More than Mr. Wilson's job is at stake. Allstate's long slump casts doubt on the future of an 80-year-old company with deep roots in Chicago and 8,400 local employees. Allstate faces the same fate that befell other stalwarts of corporate Chicago — Motorola Inc. and Tribune Co., to name two — that foundered after missing fundamental shifts in their industries.
If Mr. Wilson, 53, can't turn around the auto insurance unit, Allstate faces a long, painful shrinking process that could add many more layoffs to the roughly 1,000 local jobs it has cut since the financial crisis. With its stock trading well below book value, the company also could be vulnerable to a takeover.
"It is going to have to grow," Mr. Shields says. "It's taking forever to turn around."A BEHEMOTH IS BORN
The eighth-largest Chicago-area company, Allstate was born during the Great Depression as the in-store insurance arm of Sears Roebuck & Co. It became independent in 1995, when Sears spun it off in a $9-billion deal.
Allstate moved beyond the Sears store insurance counters, building a network of exclusive agents around the country to sell auto and homeowners coverage to middle-class Americans in the postwar era. It remains a behemoth. About $1 of every $10 spent by U.S. households on car insurance goes to Allstate; it serves nearly 16 million households.
During the 2000s, Allstate moved to reduce its reliance on insurance by expanding into banking and retirement products. It expanded in life insurance, too, selling annuities through banks and other outside firms, as well as though its agents.
Mr. Wilson, as chief operating officer under predecessor Edward Liddy and later as CEO, was the architect of the strategy. But his vision of Allstate as a financial superstore for the middle-class clientele of its agents never bore fruit, and it left the company more vulnerable than most property-casualty insurers to the financial meltdown of the late 2000s. Allstate posted a loss of $1.7 billion in 2008, largely due to investment losses. The next year, it cut its dividend in half.
Meanwhile, natural disasters pummeled the homeowners insurance business. Hurricane Katrina caused $3.7 billion in losses for Allstate in 2005, leading the company to curtail homeowners policies in coastal areas. That hurt its auto business in those regions because Allstate's customers tend to buy auto and homeowners policies from the same insurer.
While Allstate was trying unsuccessfully to diversify, rivals were revolutionizing the auto insurance business, which Allstate still counts on for most of its sales. Auto premiums generated 55% of its $31.4 billion in revenue last year.
Geico and Progressive Corp. found a new formula for growth in the relatively mature business. They crafted a lower-cost model combining direct sales over the Internet and telephone with heavy television advertising. Offering lower prices and more convenience, they grew rapidly at the expense of Allstate and other insurers that sell mostly through agents.
Allstate's second-place share of the auto insurance market fell to 10.4% from 11.3% over the past five years, while Chevy Chase, Md.-based Geico jumped two points to 8.7% and Progressive climbed to 7.9%
Meanwhile, Bloomington-based State Farm Insurance Cos., the largest car and home insurer in the U.S. and a mutual company owned by its policyholders, is consistently rated better for claims handling and service than Allstate. Unlike publicly traded Allstate, it can offer lower prices without worrying about Wall Street's reaction to the resulting shrinkage of profit margins. State Farm's auto insurance business is still growing despite an online presence even smaller than Allstate's.
Allstate finds itself in a no man's land — it's not the cheapest auto insurer, and it's not known for providing the best service.CATCHING ON
Mr. Wilson, who declined an interview request for this story, isn't the first Allstate CEO who failed to grasp the power of direct selling to reshape the industry. But he appears to get it now.
He dramatically changed course with a $1-billion deal last month to acquire San Francisco-based online auto insurer Esurance Insurance Services Inc. Formed in 1999, Esurance outsells Allstate's 10-year-old Internet platform.
Under Allstate, Esurance will keep its brand name and sell policies at lower prices than Allstate agents offer. That's another break with the past.
When Allstate launched an online sales operation in 2000 under Mr. Liddy, it didn't undercut its agents on price, fearing a backlash from the 15,000-plus salesforce.
"To me, that was the fatal flaw from the get-go," says Jeffrey Lewis, an Allstate vice-president from 1999 to 2004, who helped launch the effort. Mr. Lewis, now retired, says the customer "expectation was, 'If I did all the work myself, I was going to get a better price.' "
Geico and Mayfield Village, Ohio-based Progressive were happy to meet that expectation. During the ensuing 11 years, Allstate's annual online sales reached $700 million, while Geico's surged by $10 billion.
Mr. Wilson says things will be different with Esurance. But his new online unit will need a big dose of ad spending, which already is soaring as auto insurers vie more feverishly each year for consumers' attention.
Esurance spent $100 million on ads last year, badly trailing Geico, the industry's big spender at about $800 million. Allstate's ad budget is around $500 million, concentrated on the familiar "good hands" ads featuring actor Dennis Haysbert and Dean Winters' cheekier "Mayhem" character personifying all that can go wrong in the world. The company plans to advertise Esurance separately, with some sort of tagline identifying it as an Allstate unit.
"We'll expand (advertising) appropriately, but it will be at a reasonable return," Mr. Wilson told investors this month.
More ad spending puts more pressure on profits, a fact not lost on investors wondering how "Mayhem" can garner so much buzz (500,000 Facebook fans and nearly 10 million YouTube views) without boosting Allstate's sales.
Wall Street generally approves of the Esurance acquisition, but Allstate stock got no boost from the deal. Some question Allstate's ability to execute, given past missteps.
A $1.2-billion deal in 1999 for Chicago-based CNA Financial Corp.'s auto and homeowners insurance unit was supposed to expand Allstate's sales through independent agents. But Allstate backed away from the strategy after too many high-risk customers signed up. Its sales through independent agents shrank to $1.1 billion last year from $3 billion just after the CNA acquisition.
"Given their track record, what happens (to Esurance)?" says Greg Peters, an analyst at Raymond James & Associates in Chicago. "It may grow in the short term, but if history repeats itself this will be a shrinking book of business over the long term."
And while Allstate aims to compete more effectively with Geico and Progressive on their turf, they're targeting Allstate's stronghold among older consumers who like to buy auto and homeowners insurance from the same company. Until recently neither sold homeowners insurance. But both have linked up with home insurers to offer a bundled product.
"It's a huge chunk of business we're after," John Sauerland, Progressive's president of personal lines, told investors this month.'THREAT LETTERS'
In the meantime, Allstate is creating its own sort of mayhem within its captive agent force, which accounted for more than 90% of its $26 billion in property-casualty insurance premiums last year. The company is culling low performers and pushing for consolidation among its 11,500 agencies, hoping bigger operations will provide better service. Executives have said the number of agencies could fall by as much as 25%.
Agents say management is sending out more "threat letters," warning agents that they'll be terminated if they don't start hitting sales targets.
Allstate also is reducing base commissions for many agents and making more of their pay contingent on reaching sales goals set by the company.
"The morale today is probably at its lowest that I've ever seen," says Jim Fish, executive director of the Gulfport, Miss.-based National Assn. of Professional Allstate Agents, a frequent critic of the company over many years.
Some agents are leaving Allstate to form independent agencies and selling their old customers cheaper policies from other insurers. It's not particularly hard to do.
Agents who leave the company get a one-time severance payment equal to 1½ times a year's commissions. So, an agent with a $1-million client list can receive up to $150,000. There are no restrictions on setting up a competing agency other than locating it at least a mile from the former Allstate franchise and refraining from soliciting former customers for a year.
Greg Haynes started his own agency in Victoria, Texas, in late 2009 after taking a $300,000 buyout from Allstate following nearly 20 years as an agent. He estimates about 20% of his former Allstate customers now are with him and are insured by other companies.
Defecting agents say the power of Allstate's brand — an advantage the company touts in missives to agents — is no match for competitors' lower prices.
"We sell from Hartford, Travelers, Safeco," says Mr. Haynes' partner John Burgman, another former Allstate agent. "When the difference (in price) is 25% on an annual premium, branding takes a back seat. It really does."Joseph Lacher
, Allstate's property and casualty president, told analysts this month that the agency overhaul will take about two years but will create agencies that do a better job of retaining clients and selling other insurance products to auto policyholders. In the short term, though, he acknowledges the company could lose some customers.
"We're convinced that . . . over the couple-of-years transition, (agency performance) will improve," he said. "But inside of a year, we could see a little noise around it."
In a statement, the company adds, "Our growth strategy is to serve customers well and attract new business with effective marketing campaigns such as 'Mayhem.' This is a great time to build an Allstate agency, and we have had no problems retaining high performers or attracting talented entrepreneurs to our company."
Analyst Mr. Shields says Allstate hasn't explained adequately why bigger agents are better. And he believes the risks of the agency-rationalization campaign are higher than the company admits.
"I honestly don't (understand)," he says. "I wish I did."YET TO RECOVER
Allstate is still struggling to rebuild its finances following the crushing hit to shareholders' equity suffered during the financial crisis. Its operating returns on equity hover below 10%, far less than its 14% average over the past decade. Since its $1.7-billion loss in 2008, Allstate has posted modest earnings of $854 million, or $1.58 per share, in 2009 and $928 million, or $1.71 per share, in 2010. Revenue fell slightly last year to $31.4 billion from $32 billion in 2009.
At a recent "investor day" presentation, its first in over a decade, Allstate's top brass laid out a three-year plan for rebuilding its returns to 14%.The plan depends largely on big rate hikes on homeowners policies.
Homeowners insurance continues to bedevil Allstate. Six years after Katrina, a spate of tornadoes and other storms have caused big losses. Allstate suffered $2 billion in losses during April and May alone, nearly equal to all of its catastrophe losses in 2010.
Worries about Allstate's future are reflected in the price of its stock. At $29.43 last Friday, Allstate stock traded at 81% of its book value per share. Progressive shares, by contrast, fetch more than twice book value.
The dividend cut has yet to be restored, and Allstate has just begun repurchasing stock at modest levels — something it was doing aggressively before the crisis. Analysts who saw the company's ultra-low stock price as a buying opportunity are having second thoughts.
Citigroup's Keith Walsh cut his rating to "hold" from "buy" after the investor conference, laying out his doubts in a note that emphasized he's "not buying into management's plans."What do you think?
joe j. wrote:
Ok. Let me spell this out for anyone who wants to know that is not an Allstate Agent. The Allstate Company is ruining lives, attacking the folks that built this Company. Most employees of Allstate does not truly respect the Agent - the very person that busts their butt so that they have a paycheck. It truly has become a culture of biting the hand that feeds you over there. The management team at the top and in the Midwest is the worst that I have seen in my 20+ years as an Agency Owner winning every award that they have offered over the years. I'm one of the guys that is supposedly going to benefit from this new commission change (which amounts to nothing more than Allstate again stealing hard earned revenues from the so called independent Agency Owners that built this Company). I don't want the commission change. It is going to destroy our ranks. I have always been a roll with the punches type of happy go lucky guy throughout my life. I can honestly say that the sentiments I often feel today towards the decision makers are beyond anger. This has been a 4 year long car accident that we Agents are involved in. The management feeds us such nonsense at these corporate meetings (Alice and Bill in midwest is classic BSer that no one respects or believes) that even the younger guys are shaking there heads at the bad "sales tactics" used by management to pitch these ideas to us. We are the face of the Company. We built this Company. The tenured Agents should be respected, allowed to be profitable and sit if they so chose, and the management team should be able to hire and bring on new Agents for this new direction they are going. Why are they threatening current Agents then? It's a horrible idea, and no one is buying into it from analysts, to shareholders, and certainly not any would be Agents in the industry. The fact that they have to come after my fellow Agents shows that this management team is largely incompetent, and moreso, incapable of effectively growing any type of business. Take the new guy that they bring in from GM. Not even here 2 years, at the Leaders Forum that I attended, his speech was just cringe-worthy. He comes in without any appreciation for what the non - superstar Agent has done to build this Company. The guy compares them to a backup quarterback (painful to witness) that needs to be paid like a backup quarterback. The lack of true knowledge of our business model and core is literally mind-blowing. A lot of these guys having their Agency stolen from them are former year after year superstars that are now sitting on the business that they built - that they always were promised that they could do, but hey, what's a 50 year running promise broken and Agent lives and families destroyed to try and stop a crashing management team's results. I could go on and on. Many great Agents, like the ones in this article, have already left. More will go. Results will continue to be poor. I know. I am one of the "starting quarterback" Agents that this Company thinks it is giving more to. I don't want more money at the expense of my fellow Agents. Most of us top performers with a soul feel the same way. What can you do? This Company is being destroyed by guys that couldn't last 5 years as an Agent. If the Company had any brains, they would tap the 30 and 40 year retired Agents that lived in it for advice. These guys have offered it up, unsolicited, because they care about the Company, but they're ignored. Please management team go away is the daily hope amongst Agents. Get out of the way, stop messing with commissions, stop threatening the guys that earn the revenues to pay your salaries, show reverence for tenured Agents, and take responsibility for something! ...for once.
7/1/2011 9:46 AM CDT on Chicago Business
James K. wrote:
Tom Wilson and his leadership is doing exactly the same thing Joe Nachio did to Qwest. It is very sad to be experiencing this first hand. Now I now how the Qwest (formerly US West) employees felt.
6/30/2011 4:39 PM CDT on Chicago Business
Robert W. wrote:
The senior leaders at Allstate instead of running the business are making decisions that are trying to protect their careers. How many more quarters will the Board of Directors accept loss of auto market share and the constant blame on mother nature for the problems of Allstate? Allstate has an agency force that does not trust them. Allstate is getting ready to reduce their agents commission from 10% to 8% with a chance to grow it back to 10 or 11 plus a bonus for a total opportunity that can vary in the future from 8 to 14%. Today the opportunity is from 10 to 14%. Allstate needs to partner with their employees and agents to get the company back on track and going in the right direction. The atmosphere of fear and mistrust has led to where Allstate is today and if it stays Allstate will end up as a case study on how to ruin a great American business.
6/30/2011 12:15 PM CDT on Chicago Business
Joseph T. wrote:
What a private sector screwup!!
6/29/2011 9:52 PM CDT on Chicago Business
John C. wrote:
As a former 28+ year employee of Allstate that was unceremoniously let go with 12 other long term employees in our Department, Allstate is definitely proving that they are age bias. They have systematically been letting people go throughout the Company. They claim they are eliminating jobs but then hire two younger employees, for less wages, to do the same job. They stay short term and leave for greener pastures. This isn't helping the "bottom line". It's only adding to the total expense and at the risk of immature workers who are only in it for a paycheck. They have a Procurement effort to reduce costs and they're costing monies instead. Loyalty to the Company and to the Customer is "Out the Window". Wilson has to go, as well as his management cronies that are just "Yes Men (and Women)" and Vice Presidents that are short sighted.
6/29/2011 3:12 PM CDT on Chicago Business
L S. wrote:
Wow! It is great for someone to finally write the truth about what has been going on. Being an Allstate agent for over 15 years and the child of a lifelong Allstate agent it has been extremely difficult to watch decisions be made year in and year out that have depleted the value of our Agency, while watching the company continue to make decisions that benefit Managers, but hurt profitability and customer loyalty. Then management blames the agency force for their own shortcomings, firing highly profitable agencies because they don't sell enough Financial products. While rewarding agents that write lots of unprofitable business just to have higher sales numbers.
Short story, way to much management taking way to much of the profit off the top. Why is Tom Wilson making 12 mil a year and the stock is half the value it was 5 years ago.
6/28/2011 11:54 PM CDT on Chicago Business
Bargen B. wrote:
1) Dennis commercials put you to sleep
2) Mayhem commercials got old after the first week and they insinuate that some insurance companies, for example dont cover rocks thrown by lawn mowers -- when they all do. The commercials are plain stupid like that GPS dude. I turn the channel whenever one comes on just like i do with that stupid Jimmy Johns is fast with that obnoxious fast talking person - It makes my blood pressure rise and stresses me out. They need to study emotional advertising.
3) Employees spend tons of time hand holding and training over seas folks and I swear these people have no creativity what so ever. Then after 6 months when there up to speed they transition the job to someone else and we have to train again. And when do we, employees get time to do anything!
4) Execs spend too much money flying to these overseas locations and employees spend tons of money tracking what there working on and in some cases, just have outsourced people on teams to make it look good.
5) Allstate needs to stop wining about high prices. People who buy Allstate want the agents and the cadiac insurance. So you pay more for that than you would for a cheap bottle of wine. If you want other, then shop are online stores at esurance and answerfinancial.
6) Dont get rid of any more people except the execs. Dont cut anyones pay except the execs.
7) Hire people so our kids can have jobs and not be laying around home all depressed.
6/28/2011 2:20 PM CDT on Chicago Business
Scott B. wrote:
The only thing that Allstate has done well in the past few years are the "Mayhem" commercials. They made a great point in saying how Progressive and Geico offer better rates. They just don't cover collision and have reduced liability coverage. I am sticking with State Farm and have always been happy with how they handle claims. Younger drivers will find out soon how good their cut rate insurance is when they have an accident.
6/28/2011 11:19 AM CDT on Chicago Business
joe t. wrote:
WOW! to see this info in print is great! I lived the life of a Allstate Agent for 35+. It was great the 1st 20 years. Then came Liddy and Wilson after ruining Sears, They started destroy a great agency force. They ruined many lives and family's. They ruled as slave masters, makeing promises , then change the rules again and again. Totally misleading new hires who invested a lot of money, only to get fired and leave in a short period of time. What's wrong with the the Board of Directors? They are not doing their Fiduciary Duty, in allow Tom Wilson to ruin a once great Company
6/28/2011 10:21 AM CDT on Chicago Business
Herb C. wrote:
Appropriate that this article should appear in Crain's now, when Bill Clinton is in town to discuss job creation in America. How about discussing job retention in America? Allstate has entire departments devoted to finding outsourcing "opportunities". Hundreds if not thousands of Allstate jobs have been sent overseas in the past several years, and the fat cats collect their bonuses because of all the money they have "saved" for the company. Disgusting. A lot of focus has been on American job losses in the manufacturing sector, but Greater America may not be aware of how many white-collar jobs are being siphoned off as well. Allstate under Tom Wilson is leading the parade, and the band is playing Bollywood movie theme songs....
6/28/2011 9:23 AM CDT on Chicago Business
Steven N. wrote:
This will be a great Harvard Review case study in a couple of years as how one individual can conpletely alienate employees, destroy a companies moral and, take a compnay from riches and great potential to rags and financial ruin. He didn't listen to his agents or employees and look where it has gotten him.
Shareholders one more year of voting against him and he will be gone. I just it is not to late for some one to step in save this once great American company!
6/28/2011 8:47 AM CDT on Chicago Business
gerard v. wrote:
1) As You age, you will figure out the value of an agent.
buy on line at 21 worry more about your decision at 31.
2)Bad investment are managements bad decisions.
3)Treat your employees with respect, its funny how it will be reciprocated.
6/27/2011 7:41 PM CDT on Chicago Business
Bruce W. wrote:
I had no idea that Allstate was in such "Mayhem" as someone who recently switched over to them I guess I read this about 1 Month to late. When I first was quoted by them for both my Home and Auto the Prices seemed Fair and were less than my previous Policy with Farmers. but when I received my first confirmation The Auto Policy had jumped by $30.00 for 6 months with the only excuse "the person quoting it on the phone must have made a mistake" Then all kinds of requests started coming in for proof of past Insurance even though I have absolutely zero claims in the last 16 years. If you want to stop losing customers then stop harassing new ones it is not a very good Business Model. I think all Insurance Co's play the game of raising the rates on existing customers. I had State Farm for years with no complaints but they kept raising their rates every year once again with no claims. Finally I said enough and Farmers issued me a Home Policy for $831.00 a year in 2007 which was far less than State Farm. However by 2011 the Farmers Policy had jumped to over $1400.00 with no claims my Agent could not explain and I told him are we not in the age of declining Home Values why do you keep raising my Home value every year?
6/27/2011 5:51 PM CDT on Chicago Business
Eric F. wrote:
What an indictment of a company run amok!
If those board members who received such low approval votes want to get better results next time they should start doing their jobs. Task #1? Replace the chief with somebody with a vision for the future and the leadership skills to git r done.
6/27/2011 12:51 PM CDT on Chicago Business
Ken H. wrote:
What do you think will happen when you are charging twice as much as State Farm? I was with Allstate since the day I started driving in 1995. Then in 2005 or so I noticed that my car insurance rate kept getting a lot higher every six months. Even as I got older and have had no tickets or accidents and now had multiple policies. Then around 2008 I called State Farm and they were half the price of Allstate and when I called Allstate back to match State Farms price they said no way. I canceled on the spot and have been happy with State Farm ever since.
6/27/2011 10:59 AM CDT on Chicago Business
Marty S. wrote:
In addition to all of the items cataloged in this article, I would point out that Allstate -- advertising to the contrary -- has also decided to become a "bad" neighbor and screw over a school district in Northbrook, its home. Turns out that Allstate had been improperly -- not intentionally but improperly -- assessed and its outsized tax burden was used to fund a school district. Court decided that the tax was wrong and it adjusted it going forward. Allstate asked for a refund from the school district and the school district paid them over 3 million for the most recent 3 years. Now Allstate, not happy with that pound of flesh, has request another three years and seems prepared to ask for refunds for all 10 years. School district is broke, teachers being fired, property values dropping because of schools. Now a section of Northbrook in which it is impossible to sell a house. Thanks but it this is what it means to be in good hands, count me out. Take some money and walk, take the money in affordable increments over time but good hands do not throw an entire school district under the bus for something it had no part in. Good luck to the senior management team
6/27/2011 9:26 AM CDT on Chicago Business
Ryan W. wrote:
Unlike some people, I appreciate a good round up to help me understand the landscape of local business. Mostly though I appreciated the 'photo'. John Ueland must be quite the photographer to capture that unlikely road rally. I think Flo looks particularly vainglorious in her victory.
6/27/2011 9:15 AM CDT on Chicago Business
Tom C. wrote:
I never really understood the value of an agent outside of some advice during the initial sign up. Auto insurance should be a price driven industry with high turn over ratio. Everyone should be educated to get an insurance quote every other year and jump when it's cheaper.
As for the "home town discount" Allstate is advertising.... I literally cut my auto insurance bill in half leaving them this spring.
6/26/2011 10:56 AM CDT on Chicago Business
Gene D. wrote:
Good grief,its past time to Replace this Guy Tom Wilson,after 10's of Billions of dollars in losses in claims, toxic investments and the mistreatment of millions of Allstate customers due to high rates. To many customer of whom the company was built on,have thrown in the towel. Tom lost his way or better yet never had it. He's like a deer in the headlights,he does not know which way to go and I do not know why the Board of Directors did not end his tenure years ago. The money that Allstate is loosing daily to customer defection,agents/employees business and families being destoryed coupled with mounting lawsuits for agents misclassification and wrongful termination. How long can this go on? Thanks for letting everyone know what a disater Allstate is.
6/26/2011 10:25 AM CDT on Chicago Business
Mike S. wrote:
Thank you Mr. Daniels. It's about time someone put all this bad news together in one article to paint the picture for shareholders, employees and agents.
Allstate is firing 20+ year agents who have superb customer satisfaction results, extremely low cancel rates, very profitable, stable books of business and participate heavily in their communities. Their sin is that they are not selling enough of the over priced polices. And since they are independent contracts Allstate is not really saving much beyond commission. All because they think 7000 big agencies can service better and sell more than 11,500 of varying size. So they are going to close 25% of the locations in the channel that brings them 90% of their revenue. And this is suppose to turn everything around and bring them back to growth.
Please - someone stop this before they roll it out any further. I know direct is the way of the future, and frankly the way of "now'. But until Allstate can get it's online act together (their cancels and claims from their current online sales are astronomical) they better make life easier for their agents. At this point, with their uncompetitive rates and poor relationships with their Agents, pretty soon they won't have to ask many of them to leave. An increasing number is already getting out on their own as you can see.
And there-in is the danger. Even changing from one agent to another generally causes 25% of the book to cancel in the first 12 months. And that's with a well run transition. For the clients who have lost their Agent this year because Allstate let them go, they get a letter telling them to call an 800 number if they need help. Not quite the personal service they signed up for. My guess is 30-40% of these orphaned policy holders will hit the road if they lose their Agent. Are these the only execs that have not heard it cost more to get new clients than keep the ones you have?
And one the Execs earlier this year said the plan was to surpass State Farm in 10 years. At this rate Allstate will be a division of Geico in 5 years.
I guess we should not be surprised. This from the brain trust that ran Sears into the ground after a century of success.
Time for a drastic change in leadership, strategy and pricing. And someone should take them private. Then they can compete with State Farms of this land.
Sorry for the ramble. It's just a shame.
6/25/2011 9:36 PM CDT on Chicago Business
Wayne M. wrote:
Not really, mostly a compilation of things
6/25/2011 7:35 PM CDT on Chicago Business
Ma K. wrote:
Is there actually anything new in this column? Or is it mostly just put together from prior reports?
6/25/2011 4:00 PM CDT on Chicago Business