UPDATE: Allstate Agency Count Falls 15% Amid Overhaul
February 22 2012 - 12:54PM
Dow Jones News
Allstate Corp.'s (ALL) tally of its agencies fell 15% over the
past year, a decline that coincided with the insurer's overhaul of
agent compensation and an effort to provide funding to agencies
looking to merge.
The insurer's network of so-called "exclusive agencies" fell to
about 10,000, a decrease of about 1,500 since the last time the
company released its annual financial filing. Its current annual
financial filing was released Wednesday.
A portion of the decline, about 300 agencies, was due to a
change in the way the company counts its agencies, spokeswoman
Meghann Dowd said.
The reduction in agencies comes as Allstate has ramped up an
initiative to provide loans to its more successful agents to help
them buy up smaller agencies and take over their clients.
The company is also planning an overhaul of its
agent-compensation structure that's designed to increase bonuses
for its best agents while pushing the least-successful ones out the
door by cutting base pay.
The proposed changes prompted an uproar among agents who were
concerned about whether they would be among the group that would
see their compensation fall. The company partly backed off its plan
in December, saying it would cut base pay for agents to 9% from the
current 10%. It had initially proposed cutting the base pay to
8%.
Allstate says the money saved on base pay will go to fund an
increase in bonuses for agents that hit performance targets. The
company says the changes will be implemented in 2013.
Allstate's exclusive agencies provide about 86% of the premiums
for the company's home and auto unit, its largest segment. The
agents sell Allstate-branded home, auto and life-insurance products
almost exclusively.
The number of independent agencies, which sell Allstate policies
in addition to offerings from other insurers, fell by about 100 to
roughly 4,400 agencies.
-By Erik Holm, Dow Jones Newswires; 212-416-2892;
erik.holm@dowjones.com
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