Allstate: Agent Loyalty Index Resulting in Better Performance

There are fewer Allstate agencies in the United States than there were two years ago as some agencies have grown, while others have decided not to grow with the company, said Thomas J. Wilson, chairman, president and chief executive officer of Allstate Corp.

During a conference call with analysts to discuss the corporation's fourth-quarter earnings, Wilson was asked about Allstate's "agent rationalization plan." The chief executive said, "We don't have a rationalization plan, so to speak. What we have is a strategy of making sure we provide our customers with the best service possible and offer all of our products and services in the best way with the most experienced people we can."

All agencies "did a better job for their customers," as performance was improved in all regions, Wilson said. Allstate has "started putting standards in on performance as it relates to the 'agency loyalty index.'" On its Web site, the National Association of Professional Allstate Agents quotes from a form letter it says was sent to agents, which informs them about the agency loyalty index.

"In customer-facing areas of the company, we will be tracking results and managing employee performance down to the individual level," NAPAA quoted the letter. "Minimum acceptable agency standards will be set around your agency loyalty score."

Wilson said those that "did not make the transition are leaving the organization." In a statement Allstate said "some agencies may choose not to take this journey with us."

The NAPAA -- a group the association admits Allstate does not recognize -- recently said the insurer plans to let more than 3,000 agents go. NAPAA said Allstate has set agency marks for new business and premiums and if they are not met, they are being sent termination notices. Allstate said it has not set targets for agency numbers or size (BestWire, Feb. 1, 2010).

Wilson told analysts that as the business gets more competitive and complex, "agencies need to be larger so that they can have more experienced people in them." The number of agencies in the United States has gone down the past couple of years but the number of licensed sales professionals has gone up during the same time, he said.

In a statement, Allstate said agency growth is good for customers. "We've seen that agency locations in the range of $3 million to $4 million in premiums have the scale to support the staff and other resources needed to provide superior levels of customer service."

"To help smaller agencies get on track and grow over time, we are providing agencies with the incentives and resources necessary to meet and exceed customer expectations," Allstate said.

Asked if he thought Allstate would see agent-related lawsuits, Wilson said he did not see it as a risk. "I see it as a benefit to those agencies that are doing a great job for the customers," Wilson said. "This raises the overall bar and raises our position in the marketplace."

NAPAA has said agency owners may find it difficult to sell due to a lack of buyers. Wilson said Allstate would "provide for a transition" and help owners sell or, if there are no buyers, "we will buy it from them and then we have a variety of ways in which we take care of those customers."

Allstate Insurance Group currently has a Best's Financial Strength Rating of A+ (Superior).

In afternoon trading on Feb. 12 shares of Allstate Corp. (NYSE: ALL) stock were selling at $29.38, down 0.10% from the previous close.

(By Chad Hemenway, associate editor, BestWeek: [email protected])