UPDATE: Allstate Launches Roadside Assistance With A Twist
November 18 2010 - 11:35AM
Dow Jones News
Allstate Corp. (ALL) unveiled a new roadside assistance program
Thursday that will allow any U.S. driver--not just its own
customers--to call the company for help when they're stuck on the
side of the road.
The program won't require an annual fee, unlike other popular
roadside assistance programs, and drivers don't have to sign up in
advance--though Allstate is hoping some do. And it is hoping the
people who call for help later think of the company, the
second-largest home and auto insurer in the U.S. behind State Farm,
when their insurance policies come up for renewal.
Stranded motorists will pay a flat rate of $75 for a tow or $50
if they lock their keys in their car or need other help. Allstate
says the average person calls on their motor club for help once
every three years, and could end up saving money by using
Allstate's service instead of paying annual dues to a
competitor.
But the company's primary targets are the 35 million U.S.
households that it says don't have a roadside assistance provider.
Allstate's research shows they're typically younger drivers. And if
they get stranded and call for help, Allstate will take their name,
dispatch a tow-truck, and hope their new customers remember which
company helped them out of a jam.
"It's a great way to get more people associated with Allstate,"
said Mark LaNeve, Allstate's chief marketing officer. While the new
plan has tested well with a broad age range, LaNeve said Allstate's
research shows it is particularly appealing to customers under 40,
who tend to own their vehicles longer and may be more likely to
break down.
A new advertising campaign, featuring a character called Mayhem,
has tested well with a younger audience as well, LaNeve said.
While its closest auto-insurance competitors, Progressive Corp.
(PGR) and Berkshire Hathaway's (BRKA, BRKB) Geico Corp., have
traditionally attracted younger drivers, Allstate has skewed older.
The company has long said its policyholders buy more protection,
have more to insure, and are less likely to defect to a rival. But
for the last two years, it has been losing existing customers
faster than it can sign up new ones.
Allstate has run a motor club offering assistance similar to AAA
since 1961. Like AAA and the roadside assistance plans offered by
other organizations, it charges an annual fee. In 2008, Allstate
acquired a unit from General Electric Co. (GE) that acts as a back
office--answering phones and dispatching tow-trucks--for other
roadside assistance programs run by companies including AARP and
BMW.
Between its own roadside assistance customers and the ones
serviced by the newly acquired unit, Allstate answered 3 million
calls last year. So the company has much of the infrastructure
already in place for the new program, which it is calling Good
Hands Roadside Assistance. LaNeve said the flat fees it will charge
the new customers cover the company's costs and, "over a
couple-year period, this becomes a profitable business in and of
itself."
Drivers who anticipate they will call on Allstate when they're
stranded can sign up in advance on the company's website. Allstate
says this will "improve response time," but it also means the
company can learn more about its potential future customers. And a
motorist who cold-calls the company from the side of the road will
have to provide the same information the company is collecting on
the web.
-By Erik Holm, Dow Jones Newswires; 212-416-2892;
erik.holm@dowjones.com
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