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Allstate's Transformative Growth Plan has several key goals, including reinventing consumer protection and retirement. The company is implementing many new technologies, including investing in mobile applications and redesigning its property liability products. While these initiatives will take several years to fully implement, they are sure to benefit all of the company's stakeholders. Read on to find out how Allstate can make its transformation a success. Here's a closer look at the key goals of the Transformative Growth Plan.
Allstate's Transformative Growth Plan
This year, Allstate CEO Tom Wilson introduced the company's "Transformative Growth Plan," a strategy to increase its share of the personal lines market. For the past decade, Allstate has steadily lost share in this market, and the company is now looking to increase its market share by 2020. To make this possible, Allstate is cutting commissions for existing policyholders and increasing compensation for new customers. And, to keep the customer base happy, it's pushing agents to steer clients to its new customer service center.
Allstate's Transformative Growth Plan is aimed at reducing costs and increasing efficiency by implementing a new model. The insurance giant receives a significant portion of its revenue from net investment income, accounting for 6.7% of its total revenue in H1 '21. This income can be reinvested to grow the company's revenue and improve its capital management performance. However, the strategy also involves letting go of some agents without severance, and it is important to note that Allstate's employees will have little to no incentive to return to the company.
Allstate's Transformative Growth Plan is aimed at reducing costs and increasing efficiency by implementing a new model. The insurance giant receives a significant portion of its revenue from net investment income, accounting for 6.7% of its total revenue in H1 '21. This income can be reinvested to grow the company's revenue and improve its capital management performance. However, the strategy also involves letting go of some agents without severance, and it is important to note that Allstate's employees will have little to no incentive to return to the company.
Company's auto policies plateaued at 21.8 million in the first quarter
While new policies have increased by 5 percent in the past year, renewals have been stagnant at all-time lows. This is partly due to the company's emphasis on new business. Every percentage point decline in renewals is equivalent to losing 200,000 policies. That said, customer retention has been a strength for Allstate. Its renewal rate reached 86.7 percent in the first quarter, and it peaked at 88.5 percent in the first quarter of 2018.
The company's actions, however, point in another direction. The company is putting agents at a pricing disadvantage while funneling new customers to a company-run call center. This is indicative of a new model centered on direct sales, and it is unclear what role agents will play in it. But analysts expect the shift to a more direct sales model in the second half of 2018.
The company's actions, however, point in another direction. The company is putting agents at a pricing disadvantage while funneling new customers to a company-run call center. This is indicative of a new model centered on direct sales, and it is unclear what role agents will play in it. But analysts expect the shift to a more direct sales model in the second half of 2018.
Company's expense ratio increased 0.8 points in the second quarter
The P&C combined ratio for the Allstate brand grew 12.2 percentage points year-over-year to 107.9% in the second quarter of 2020. The rise was largely attributable to difficulties in the personal auto segment. The company is focusing on improving the efficiency of its auto insurance business to improve its expense ratio. In the second quarter, it implemented auto rate increases in 28 locations. These increases increased the total premiums by 3.6%.
The company's property-liability combined ratio was 104.8 for the third quarter of 2011, including an 89.2 percent increase in catastrophe losses, as well as a 5.0% decline in policies in force. Despite these challenges, Allstate continued to take actions to increase its returns on homeowners. While new business declined during the third quarter due to a 13.9% rate increase in 15 states, policies in force were down because of restrictions on new business and the decision not to offer continuing coverage. During the third quarter, the company's expense ratio was 131.9 points, including an increase of 55.8 points from the prior quarter.
The company's property-liability combined ratio was 104.8 for the third quarter of 2011, including an 89.2 percent increase in catastrophe losses, as well as a 5.0% decline in policies in force. Despite these challenges, Allstate continued to take actions to increase its returns on homeowners. While new business declined during the third quarter due to a 13.9% rate increase in 15 states, policies in force were down because of restrictions on new business and the decision not to offer continuing coverage. During the third quarter, the company's expense ratio was 131.9 points, including an increase of 55.8 points from the prior quarter.
Company's cost-controlling plan impacts approximately 3,800 employees
The home and auto insurance giant Allstate has announced a cost-controlling plan that will eliminate nearly 8% of its workforce. The layoffs will be spread among claims, support and sales positions. United Airlines already announced cost-cutting plans in August that would eliminate 12,000 jobs through buyouts or furloughs. The airline company is expected to make additional cuts in August.
The cuts will impact about 3,800 Allstate employees. The job cuts will be spread across claims, sales and service functions. The company plans to eliminate approximately $80 million in costs over the next three years. In addition to the layoffs, the company will be integrating the Esurance brand with Allstate. It plans to use the direct distribution expertise of Esurance to cut costs and improve profitability.
The cuts will impact about 3,800 Allstate employees. The job cuts will be spread across claims, sales and service functions. The company plans to eliminate approximately $80 million in costs over the next three years. In addition to the layoffs, the company will be integrating the Esurance brand with Allstate. It plans to use the direct distribution expertise of Esurance to cut costs and improve profitability.
Company's commissions increase to 30 percent for new policy sales
The move to make commissions more attractive for agents comes amid concerns that the company will lose customers. While customer loyalty improved over the first nine months of 2009, auto policies in force were down 1.3 percent and home insurance policies were down 4.1 percent. As a result, many agents will find it difficult to sell their shops. In Illinois, for example, there are two dozen agents advertising on Allstate's Web site, compared with two in August 2008.
The company is also lowering the base commission for agents. Starting in 2020, Allstate will pay agents nine percent commissions for new policy sales and will cut their base pay by 30 percent over three years. The company has positioned the move as a way to increase revenue. If it does succeed, this move could have a positive impact on the future of insurance. The company has been reducing base pay for agents since 2001, and is expected to eliminate more than half of it within three years.
The company is also lowering the base commission for agents. Starting in 2020, Allstate will pay agents nine percent commissions for new policy sales and will cut their base pay by 30 percent over three years. The company has positioned the move as a way to increase revenue. If it does succeed, this move could have a positive impact on the future of insurance. The company has been reducing base pay for agents since 2001, and is expected to eliminate more than half of it within three years.
