Allstate Error On Commissions Adds To Agent Anxiety

An Allstate Corp. (ALL) system that shows agents how much they've earned in monthly commissions under-reported January payments on Wednesday, setting off an uproar among the insurer's sales force.

The summary of each agent's January commissions has since been removed from the system. Allstate promised its agents corrected statements would be issued by Monday and the proper amount would be paid as scheduled on Wednesday.

The error comes at a time when many of the company's agents are already on edge about upcoming changes in the way their commissions are calculated. The company partially backed down from its proposed changes in December amid the outcry, but it still plans to cut base commissions for agents by 10% in 2013.

Allstate on Wednesday told agents that the January calculations were incorrect "due to missing data." January commissions are calculated using sales information from December.

Before Allstate acknowledged its error, agents took to the message boards to say their monthly pay had fallen by 20% or more in some cases, adding that they were worried about paying January expenses.

Allstate agents are classified as independent contractors, not employees, and must cover their own costs, including the salaries of their staff.

While some expressed anger at the company over the mistake, one agent said they "almost cried when I saw this originally...I hope no one laid off an employee in the time it look to correct this."

The company told agents in a statement on its internal system that it "apologize[d] for the anxiety this situation has caused among agency owners. We are working diligently to correct the reports."

A company spokeswoman had no immediate comment.

The agent reaction shows the ill will that exists in some parts of Allstate's sales force as Chief Executive Tom Wilson works to boost sales and improve customer loyalty.

The 2013 cuts to base commissions are a large part of that effort. Originally, the company had proposed cutting base commissions to 8% from 10% in 2013, and settled on 9% last month.

Wilson has said the insurer will use the money it saves on base commissions to fund additional rewards for agents who meet sales targets and service goals. Executives have said the changes will better reward larger and more successful agencies, but may prompt smaller agencies to close down or sell themselves.

The explanation of the error on the company's internal system for agents had tallied over 8,000 views by midday Thursday, according to an agent that saw the count alongside the posting. Allstate has more than 11,000 agencies in the U.S.

-By Erik Holm, Dow Jones Newswires; 212-416-2892; erik.holm@dowjones.com

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