Allstate Cutting Its Esurance Line To Focus On Building Up Its Name Brand

Allstate announced Thursday it will get rid of its Esurance brand next year as part of a “transformative growth plan," an effort to streamline business operations and focus on the company’s name brand.

The company will continue to sell home, renters, auto and life insurance policies online, but under the Allstate name.

The company is also consolidating Encompass Insurance, a subsidiary that sells personal property and casualty insurance, and Answer Financial, a website that allows customers to compare quotes, under the Allstate brand.

“Our competitors have increased their advertisement. We cannot let our historic brand dwindle away," Allstate’s President and CEO Tom Wilson said. "We are branding it all into one.”

Wilson said the company will increase its Allstate marketing as it phases out Esurance. Allstate also is making changes to its systems.

“We are redoing products to make it simpler for customers. We are going to clean it up and make it more simple,” Wilson said.

Allstate will outsource some basic customer inquiries -- billing questions and change-of-address requests, for example -- to call centers. Wilson said that change will free agents up to serve as financial advisers to their clients.

In 2011, Northbrook-based Allstate bought Esurance for $1 billion to compete with online insurance companies like Geico and Progressive, but the Esurance brand didn’t dazzle. In 2017, Esurance lost $56 million, and it reported a $25 million underwriting loss last year.

According to a J.D. Power report, Progressive and Geico accounted for 54% of the growth in auto premiums in 2018.

Allstate is the fourth-largest underwriter of auto insurance in the nation, with 9% market share, according to the Insurance Information Institute. Bloomington-based State Farm is the largest auto insurer, with 17% market share.

After a two-year period of not increasing rates, Allstate in August said it would hike car insurance rates by 1.7% in Illinois, according to a filing with the state Department of Insurance. State Farm, on the other hand, has been cutting rates and announced earlier this year that it was dropping rates by 2% in Illinois.

The plan to eliminate the Esurance brand comes as Allstate implements changes in the commissions it pays its agents.

Starting Jan. 1, the company will tie a portion of agents’ compensation to how many new customers they bring in and the amount of additional services they add onto current policies.

When asked if there is still a need for agents, Wilson said, “There absolutely is. This (Thursday announcement) reaffirms our commitment to our Allstate agents. We found that over half of our customers want an agent.”

Ted Paris, the executive director of the National Association of Professional Allstate Agents, said the company’s announcement Thursday is seen as a good sign among agents because they had to compete with Esurance and the other Allstate brands.

“Most agents will take this as a positive spin,” Paris said. “(Esurance) has been a mixed bag for the company, and now they are saying we put that money into the name brand.”

abjimenez@chicagotribune.com

Twitter @abdel1019

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