Allstate Warns Agents Of Errors In Their Tax Documents, Reports

Allstate Corp. (ALL) warned its insurance agents Friday that it had discovered separate errors in their tax documents and the year-end reports that show data used to calculate their annual bonuses.

The tax documents--the "Form 1099" that shows each agent's 2011 income--in some cases provided incorrect information about how much agents had been paid, and in other cases listed pay data belonging to another agent. A spokeswoman said about 5,600 agencies were affected.

The company told agents they may have to file an amended tax return if they had already paid their taxes, and promised to reimburse them for the cost of resubmitting their returns.

The second mistake, which the company said was unrelated, was in a December performance report that shows figures that will be used to calculate annual bonuses.

The company hadn't yet told agents what their bonuses would be. The company has pulled the report from the computer system that agents use, and told the agents it is re-running the report and will tell agents what their bonuses will be on Feb. 14.

The Allstate spokeswoman, Meghann Dowd, said the company anticipates paying the bonus, which has historically been distributed around Feb. 14, on Feb. 23. Under the agents' contracts, the bonuses must be paid by March 15, Dowd said.

The error comes one month after a separate mistake in a pay report set off an uproar among the insurer's sales force. The report was amended, and the monthly commissions were paid on time.

Even before that mistake, many of the company's agents were 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.

In the notice posted on its agent computer system Friday, the company said Allstate's "leaders understand and apologize for the anxiety, concern and inconvenience that both of these issues may cause some agency owners." It told agents the issues "are receiving leadership's undivided attention until they are resolved."

Dowd said the issues were found "as part of our regular due diligence."

Allstate agents are classified as independent contractors, not employees. She said the errors did not affect Allstate employees.

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

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