The company has announced plans to consolidate agency offices and restructure its business. This layoff news has raised a number of questions, including how Allstate plans to handle the layoffs, the impact of the restructuring plan, and the effect on customers. To help employees, the company is offering expanded transition support, priority internal hiring, extended medical coverage, and retraining assistance. Allstate will also help them find new employment.
Allstate's plan to consolidate agencies
Allstate's recent announcement that it plans to lay off 4,000 employees at its suburban Chicago headquarters is an attempt to boost its marketing efforts by leveraging the local presence of captive agencies, integrating this with the use of direct response call centers and promoting Allstate branded products via the internet. The company also plans to shed office overhead, income tax withholding responsibility, pension and medical plan expenses by turning its 6,500 employee agents into independent contractors. To date, the company has converted more than 1,000 employee agents into exclusive agents and has sold a few hundred jobs to other companies.
The Allstate consolidation is part of a broader strategy that is geared towards maximizing revenues while minimizing costs. Allstate's recent acquisition of National General and Encompass has further highlighted its intention to move away from the captive model of insurance brokerage. As a result, the companies have reduced commission rates for agents after the layoffs. Nationwide has made a similar move, switching to an independent carrier. The consolidation of agencies by Allstate could result in a drastic change in the insurance brokerage industry.
The Allstate consolidation is part of a broader strategy that is geared towards maximizing revenues while minimizing costs. Allstate's recent acquisition of National General and Encompass has further highlighted its intention to move away from the captive model of insurance brokerage. As a result, the companies have reduced commission rates for agents after the layoffs. Nationwide has made a similar move, switching to an independent carrier. The consolidation of agencies by Allstate could result in a drastic change in the insurance brokerage industry.
Cost of restructuring plan
Allstate Corp. has announced plans to restructure the company in order to increase its market share in the personal property liability insurance market. These plans will increase customer value and marketing technology, but will cost the company around $300 million. The restructuring plan will also cause Allstate to cut down on costs to maintain profit margins. Among the costs of the restructuring plan are employee benefits and severance costs of more than $210 million. Another $80 million will come from closing down offices.
The restructuring plan will affect Allstate Corp's cost structure and its 3,800-person workforce. These cuts are expected to occur in the sales, claims, service, and support functions. These job cuts will impact regional offices. The company is integrating Esurance into its brand and leveraging its direct distribution expertise. Allstate expects to incur around $290 million in restructuring charges. The company expects the resulting savings to be more than enough to pay for the cost of the restructuring plan.
The restructuring plan will affect Allstate Corp's cost structure and its 3,800-person workforce. These cuts are expected to occur in the sales, claims, service, and support functions. These job cuts will impact regional offices. The company is integrating Esurance into its brand and leveraging its direct distribution expertise. Allstate expects to incur around $290 million in restructuring charges. The company expects the resulting savings to be more than enough to pay for the cost of the restructuring plan.
Impact of layoffs on customers
In light of Allstate's recent mass layoffs, the insurance company has restructured its sales force and shifted payroll processing to the end of the week. In addition, the company now makes its agents sign an arbitration agreement, a practice that reflects a shift to a direct-selling model. While the company has worked to streamline its workforce, it has not fully embraced the direct-selling model.
The allstate layoffs affect more than its employees, however. The company is consolidating its sales force to concentrate on a few key areas, such as insurance. Executives are dealing with this pandemic by extending transition support for employees. Benefits will include medical coverage, retraining assistance, and employment search assistance. The company declined to reveal how many offices are closing or how many employees will be made redundant.
The allstate layoffs affect more than its employees, however. The company is consolidating its sales force to concentrate on a few key areas, such as insurance. Executives are dealing with this pandemic by extending transition support for employees. Benefits will include medical coverage, retraining assistance, and employment search assistance. The company declined to reveal how many offices are closing or how many employees will be made redundant.
Impact of move to direct-to-customer model
The layoffs are part of an Allstate multi-year growth strategy, and they will affect more than 200 employees. These cuts will include sales and billing functions, as well as the servicing and claims divisions. The company has largely been profitable but the cuts will reduce its bottom line. Not all the affected employees will be affected in the insurance sales division, though. In addition to reducing its sales force, Allstate will also cut costs in other areas of its business, including its insurance business.
The company's Transformative Growth Plan, first unveiled in December, calls for restructuring the entire organization to increase profits and efficiency. Executives have been vocal about their frustration with the current state of the company. They also spoke of transforming insurance agents from salespeople to service advisors. The impact of the new strategy on Allstate layoffs is unclear, but it is an important step for the company.
The company's Transformative Growth Plan, first unveiled in December, calls for restructuring the entire organization to increase profits and efficiency. Executives have been vocal about their frustration with the current state of the company. They also spoke of transforming insurance agents from salespeople to service advisors. The impact of the new strategy on Allstate layoffs is unclear, but it is an important step for the company.
