Allstate Warns Agents of Tax and Bonus Errors

Michael Buck

Allstate Corp. has recently warned its agents of two separate errors that affect tax documents and year-end data used to calculate annual bonuses.

The company said immediate corrective action is being taken and will not affect compensation. Spokeswoman Meghann Dowd said about 4,700 agency owners are affected

"We take these matters seriously, and we will be rectifying them in a thorough and expeditious manner," the company said in a written statement.

The company issued 1099 tax forms that reported inaccurate income information and in some cases listed income belonging to another agent.

The second error stems from an incorrect December performance report used to calculate bonuses. The company said they are redoing the report with "additional checks and balances." The company is contractually obligated to pay bonuses by March 15, but anticipates they will be paid by Feb. 23

Jim Fish, executive director of the National Association of Professional Allstate Agents, said agents aren't happy with the mistakes. He said in some cases agents will have to file amended tax returns and bonuses will come later than usual.

"They're just beside themselves. There is a lot of anger out there," Fish said. "They are calling for an independent audit of the numbers, because they're at the point where they are not really trusting what Allstate is telling them."

Fish's organization is not affiliated with Allstate, but represents about 1,300 agents in a guild partnered with the Office and Professional Employees International Union (Best's News Service, Aug. 17, 2011).

Allstate said it uncovered the mistakes through routine due diligence and notified agents on Friday. The company apologized to those affected in their written statement.

"We regret any confusion, inconvenience or anxiety these recent process errors may have caused amongst some of our agency owners," the statement said.

The mistakes come at a time when some agents are unsatisfied with their relationship with Allstate, Fish said. In January, the NAPAA conducted a survey of 1,800 Allstate agents that found 73% of agents were "not very" or "not at all" satisfied with the company and 85% wouldn't recommend becoming an Allstate agent.

Jim Towns, an Allstate agency owner and co-chairman of the company's Agency Executive Council, dismissed the survey results.

"Members of this club seem to be disgruntled agents and former agents and their survey does not reflect the relationship Allstate has with their agency owners," Towns said in a written statement. "Allstate has been working closely with agency owners to understand the challenges and opportunities of the agency force."

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

Shares of Allstate (NYSE: ALL) on the afternoon of Feb. 13 were trading at $31.36, up 1.26% from the previous close.

(By Michael Buck, senior associate editor, BestWeek: [email protected])