Donna Junior
Active member
- Credits
- $4.33100
Allstate Corp., the biggest car and home insurance company in the U.S., plans to lay off 3,800 workers, or about 8 percent of its workforce. About 1,000 of those layoffs are linked to refunds stemming from pandemic-related refunds. Chief Executive Thomas Wilson said the refunds are a result of a sharp decline in driving, government shutdowns, and fear of Covid-19. Fewer auto accidents mean fewer claims people to file.
Allstate plans to eliminate captive agents
The recent announcement by Allstate Insurance Company about the elimination of captive agents has some people worried. While captive agents were once a great way to boost productivity and retain employees, they are not as effective as employees. The company is trying to avoid costly litigation and competitive disadvantage by eliminating the captive agent model. But even if it does, it will still compete with other insurance companies that require independent contractors. And, in the end, all of this could lead to an increased number of unhappy consumers.
In December, Allstate announced plans to phase out captive agents, beginning with Esurance. This online company allowed customers to purchase insurance through its website. While the company's property-liability products are traditionally sold through agencies, call centers, or the internet, Allstate intends to merge Esurance with Answer Financial Groups to increase marketing, reduce costs, and support competitive prices. But this consolidation won't happen overnight.
In December, Allstate announced plans to phase out captive agents, beginning with Esurance. This online company allowed customers to purchase insurance through its website. While the company's property-liability products are traditionally sold through agencies, call centers, or the internet, Allstate intends to merge Esurance with Answer Financial Groups to increase marketing, reduce costs, and support competitive prices. But this consolidation won't happen overnight.
It will reduce commissions to agents
Despite the increase in sales, commissions paid to captive agents have been steadily declining. In fact, the number of new policies sold by Allstate fell to 2.5 million policies in 2020, compared to 2.6 million in 2017. This decline was partially offset by increases in online and phone sales, and a 0.7% increase in the number of Allstate brand auto policies. These factors have led Allstate to pivot away from using captive agents to increase direct distribution of its products.
In a move to reduce its costs, the company is reducing commissions to its sales force. The company is reducing base commissions to agents by two to three percent. The cut will result in a 20% reduction in base pay for Allstate agents. But the company framed the move as an opportunity to generate more revenue, and it intends to keep the 30-percent commission it pays to agents for new business.
In a move to reduce its costs, the company is reducing commissions to its sales force. The company is reducing base commissions to agents by two to three percent. The cut will result in a 20% reduction in base pay for Allstate agents. But the company framed the move as an opportunity to generate more revenue, and it intends to keep the 30-percent commission it pays to agents for new business.
It will eliminate Esurance as a brand
Allstate plans to phase out its Esurance brand over the next several years. Executives are framing this decision as a way to improve customer access, cut costs, and enhance the overall offering of the insurance company. They say retiring the Esurance brand will free up money for marketing and agents. In the coming years, they intend to focus on the company's main brand. But what exactly will this change mean for consumers?
The company acquired Esurance in 2011 for $1 billion in cash. In the months following, the company began transitioning its customers from the Esurance brand to the Allstate brand. This includes customers of Allstate property liability policies. In addition, consumers could purchase policies from Esurance through multiple channels, including the Internet. However, the brand was a favorite of tech-savvy consumers who prefer to manage their own insurance plans. Moreover, Esurance offers supplemental coverage for ride-share drivers. However, Allstate is phasing out the Esurance brand by 2020.
The company acquired Esurance in 2011 for $1 billion in cash. In the months following, the company began transitioning its customers from the Esurance brand to the Allstate brand. This includes customers of Allstate property liability policies. In addition, consumers could purchase policies from Esurance through multiple channels, including the Internet. However, the brand was a favorite of tech-savvy consumers who prefer to manage their own insurance plans. Moreover, Esurance offers supplemental coverage for ride-share drivers. However, Allstate is phasing out the Esurance brand by 2020.
It will compete directly with State Farm
State Farm and Allstate will compete in the auto insurance market. Both offer auto insurance quotes online and face-to-face. Both companies offer the Drivewise feature for auto insurance, which analyzes your driving habits and suggests ways to improve your driving. State Farm even integrates with Siri. Which one offers better customer service? Let's take a closer look. Let's see how they compare in terms of technology and features.
State Farm and Allstate are neighboring car insurance companies. Both companies have about the same market share. State Farm is a mutual company, owned by policy holders. Meanwhile, Allstate is owned by public shareholders. While they answer to customers, Allstate answers to Wall Street, so the companies often have conflicting interests. Managing director Paul Newsome of Sandler O'Neill & Partners L.P. says that while State Farm has the advantage of being owned by policyholders, Allstate struggles to balance stockholder demands and customers' desires.
State Farm and Allstate are neighboring car insurance companies. Both companies have about the same market share. State Farm is a mutual company, owned by policy holders. Meanwhile, Allstate is owned by public shareholders. While they answer to customers, Allstate answers to Wall Street, so the companies often have conflicting interests. Managing director Paul Newsome of Sandler O'Neill & Partners L.P. says that while State Farm has the advantage of being owned by policyholders, Allstate struggles to balance stockholder demands and customers' desires.
