DOW JONES NEWSWIRES
Allstate Corp. (ALL) on Wednesday alerted its sales force that
it was partially backing down on an unpopular revision to the way
it calculates their pay.
The insurer, which currently pays its agents a 10% base
commission, said it would cut the base pay to 9% beginning in 2013,
instead of the 8% it had announced previously. The 9% base will
last until at least 2014, the company said.
But the basic goal behind the change in the company's
compensation structure remains the same: Allstate will use the
money it saves on base commissions to fund additional rewards for
agents who meet sales targets and service goals.
The pay overhaul is designed to boost the effectiveness of
Allstate's sales force after years of losing market share to
smaller rivals including Geico Corp. and Progressive Corp. (PGR).
Executives have said the changes in pay will better reward larger
and more successful agencies, but may prompt smaller agencies to
shut down or sell themselves.
The original plan to cut the base pay to 8% was met with a broad
outcry from the company's sales force, and supervisors quickly
began telling agents that the 8% figure wasn't set in stone.
The plan was hatched under Joseph Lacher, who was forced out by
Chief Executive Tom Wilson before it could be implemented. His
departure was said to be unrelated to the compensation overhaul,
but was tied in part to the performance of the home- and
auto-insurance units Lacher oversaw.
Mark LaNeve, the company's chief marketing officer and senior
executive vice president for agency operations, is now overseeing
the overhaul in agent pay.
Under the revised pay program announced Wednesday, agents will
be able to earn an additional 6% in bonuses on top of their 9%
base, giving them the possibility of earning total commissions as
high as 15% of their annual premiums. That's up from the current
14.2% for top performers.
A company spokeswoman said the change in the compensation will
"better reward agency owners for serving our customers, investing
in their business and delivering higher levels of performance."
Jim Towns, co-chair of Allstate's Agency Executive Council, said
the change "gives agency owners time to transition their business
strategy and the agency owner can plan into the future now that we
know the commission structure for the next three years," according
to a statement provided by the company. The Agency Executive
Council is comprised of about 20 agency owners who serve as a
strategic sounding board for Allstate's senior executives.
-By Erik Holm, Dow Jones Newswires; 212-416-2892;
erik.holm@dowjones.com